Court File and Parties
COURT FILE NO.: 15-66025
DATE: 2019-10-16
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
6056628 CANADA INC. and 1443900 ONTARIO INC.
Plaintiffs/Moving Parties
– and –
2350894 ONTARIO INC.
Defendant/Responding Party
Counsel:
Christopher Spiteri/Nicholas Habets, for the Plaintiffs/Moving Parties
James F. Leal/James D. Wilson, for the Defendant/Moving Party
HEARD: By written submissions
Decision on Costs
Beaudoin J.
[1] The Plaintiffs sought partial summary judgment seeking a declaration that Minutes of Settlement (“Minutes”) executed in 2009, amended the Lease Agreement between the parties and that the Defendant is bound by those Minutes since becoming the Plaintiffs’ landlord. By way of cross-motion, the Defendant sought a cross-motion for a declaration that the Minutes do not amend the Lease Agreement and that it was not bound by them. The Defendant also sought an order dissolving the interlocutory injunction presently in place.
[2] The Plaintiffs were completely successful, and I dismissed the Defendant’s request to dissolve the interim injunction. The Defendant had made an earlier attempt to dissolve the interim injunction before Justice Williams. That motion was heard over three days; November 29, 2018, December 12, 2018, and December 20, 2018. The motion was dismissed on terms.[^1] Justice Williams concluded that the enforceability of the Minutes were the central issue in this case and reserved the costs of the motion before her to be decided by the court hearing the summary judgment motion.
Plaintiffs’ Position
[3] The Plaintiffs seek their costs of both motions. They submit that they made several attempts to resolve this dispute and to narrow the issues in dispute. They suggested a Rule 21[^2] motion, offered to pay amounts owing into court under protest, and offered to submit certain specific issues to arbitration. These suggestions were rejected by the Defendant.
[4] To avoid the costs of the motion, the Plaintiffs offered to consent to setting aside the injunction subject to the Defendant undertaking not to act adversely to the Plaintiffs’ lease interest until the matter was resolved by the court. The Defendant rejected this and proceeded with their motion at considerable expense to the Plaintiffs.
[5] The Plaintiffs submit that their offer of November 12, 2018 is a valid offer under Rule 49. They claim that the Defendant’s counteroffer was entirely unreasonable as it would have required a payment by the plaintiffs of monies that were calculated improperly.
[6] The Plaintiffs submit that the Defendant’s conduct forced the first motion to be heard over the course of three days. The Defendant took the full two hours allocated for the original hearing of the motion plus an additional two hours. The Plaintiffs submit that allegations made by the Defendant during oral argument weigh in favour of granting substantial indemnity costs to them. According to the Plaintiffs, the Defendant made a series of events unsubstantiated, untrue and inflammatory allegations about the Plaintiffs which were not supported by the record before the Court. The Defendant alleged that the Plaintiffs had unclean hands and referred to the principals of the Plaintiffs as thieves.
[7] While the Defendant repeatedly claimed to have been handcuffed by the injunction, Justice Williams noted that the injunction had been allowed to stay in place for three years.
[8] The Plaintiffs add that the Defendant breached rule 24.1,14 of the rules by referencing the mediation session.
[9] The Plaintiffs rely on the rule that costs follow the event and their prima facie entitlement to costs. The Plaintiffs submit that they have been forced to absorb significant costs associated with responding to an unnecessary and unreasonably drawn-out return of motion and cross-motion, neither of which were meritorious. They submit that their proposal to deal with the matter by way of summary judgment would have been appropriate to deal with the matter and they seek their costs on a substantial indemnity basis.
[10] In their Cost Outlines, the Plaintiffs sought substantial indemnity costs in the amount of $24,283.35 for the motion to dissolve the interim injunction and the amount of $16,589.78 for the motion for partial summary judgment.
The Defendant’s Position
[11] The Defendant acknowledges that generally costs follow the event and are paid by the unsuccessful party to the successful party at a scale and quantum determined by the motions Judge. The Defendant had initially claimed costs of the motion before Justice Williams. as provided by rule 57.01(2). In the alternative, the Defendant sought an order that the costs of the motion be in the cause, to be determined at the time of hearing of the motion for summary judgment on the matter of the enforceability of the alleged Minutes.
[12] In its cost submissions, the Defendant has essentially repeated the arguments made on both motions and seeks to justify its actions. The Defendant submits that every single submission and characterization made by it, during its argument, is substantiated by the affidavits and the transcripts filed on the hearing.
[13] The Defendant claims that the Plaintiffs first communicated the request for a motion for summary judgment one week prior to the scheduled hearing of the motion to dissolve the injunction. The Defendant submits that this was partially done to influence the court’s consideration of the dissolution of the injunction.
[14] The Defendant submits that the Plaintiffs’ counsel was in direct communication with Defendant’s counsel in October of 2015 and yet chose to obtain the injunction on an ex parte basis. The Defendant submits that it has attempted to settle this matter continuously throughout the history of this matter and only brought the motion to dissolve the injunction upon the failure of the Mediation. The Defendant rejects the Plaintiffs’ characterization of the Defendant’s conduct and states that, contrary to the unsubstantiated allegations of the Plaintiffs, the Defendant always acted reasonably. [BMJR(1]
[15] In their Cost Outlines, the Defendant sought costs on a substantial indemnity basis before Justice Williams in the amount of $24,582.13 and $20,308.23 on the motion for summary judgment.
Analysis and Conclusion
[16] The Plaintiffs were substantially successful on the motion before Justice Williams and completely successful on the motion for partial summary judgment. There is no reason to depart from the rule that the successful party is entitled to costs. Moreover, I find that the Plaintiffs’ Offer to Settle, dated November 12, 2018 was a reasonable Offer to Settle. In contrast, the Defendant’s counter-offer left the Plaintiffs with no choice but to defend the motion to dissolve the injunction and to proceed with its own motion for summary judgment.
[17] Having regard to the factors set out in Rule 57, I note that the amounts in issue are significant. As a term of their Offer to Settle, the Defendant was seeking an immediate payment of over $195,000 and that the Plaintiffs would continue to pay rent in a disputed amount.
[18] The Defendant claimed higher costs that the Plaintiffs. It could have reasonably expected to pay the amounts now claimed by the Plaintiffs.
[19] The issue was not particularly complex – the law is clear on the interaction of due diligence and estoppel certificates.
[20] The issues were of importance to both parties as they are locked in a tense commercial tenancy.
[21] The motion to dissolve the interim injunction had to be argued over three days. Justice Williams determined that the Plaintiffs had shown that there is a serious issue to be tried in respect of the Minutes of Settlement. The defendant used most of that time. Justice Williams was satisfied that an extension of the injunction was the most practical available solution.
[22] In my decision, I recognized that the estoppel certificate could have been more clearly drafted. While it was signed by the Plaintiffs, it was prepared by the vendor or the vendor’s solicitor.
[23] The 2009 Minutes of Settlement were specifically referred to in exhibit “A” to the estoppel certificate. The Defendant was aware that these Minutes extended the term of the Plaintiffs’ lease to 2026. The discovery of the actual Minutes could have been easily obtained by the exercise of due diligence. The Defendant was happy to see that the lease had been extended to 2026, as this placed it in a favourable position with its lender.
[24] The operating expense statements provide to the Defendant disclosed that the Plaintiffs were not paying for some expenses, but the Defendant did not ask any questions an assumed it was bad bookkeeping by the vendor.
[25] I find it curious that the Plaintiffs initially sought the motion for an interim injunction without giving notice to the Defendant even though there had been communications with their counsel. The Defendant then waited nearly 3 years to attempt to dissolve the injunction.
[26] I question why the Defendant took no steps against the vendor for clear breaches of the representations made by the vendor it its Agreement of Purchase and Sale.[BMJR(2] The Defendant did not provide an adequate explanation for that failure.
[27] I find that an excessive and unnecessary amount of time was expended by all parties in preparing for and arguing both motions. The supplementary affidavits and extensive cross examinations were largely unnecessary. In the end, the court’s decisions turned on a plain reading of the estoppel certificate, the contract documents, the case law, and some critical admissions by the principals of the Defendant.
[28] The lack of clarity in the estoppel certificate required a determination by the Court. This motion for partial summary judgment leaves other issues to be determined and, neither this motion, nor the motion to dissolve the injunction, were the most cost- effective approach to resolving the disputes between these parties.
[29] For these reasons, I decline to make an order for costs on a substantial indemnity basis and I award the Plaintiffs their costs on a partial indemnity basis which I fix in the amount of $25,000.00 which amount is payable forthwith.
Mr. Justice Robert N. Beaudoin
Date: October 16, 2019
COURT FILE NO.: 15-66025
DATE: 2019-10-16
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
6056628 CANADA INC. and 1443900 ONTARIO INC.
Plaintiffs/Moving Parties
– and –
2350894 ONTARIO INC.
Defendant/Responding Party
Decision on costs
Beaudoin J.
Released: October 16, 2019
[^1]: 6056628 Canada Inc. v. 2350894 Ontario Inc., 2019 ONSC 1329 [^2]: Rules of Civil Procedure, R.R.O. 1990, Reg. 194
[BMJR(1]
[BMJR(2]