COURT FILE NO.: CV-17-579044
DATE: 20191106
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MARKHAM VILLAGE SHOPPES LIMITED
Plaintiff
– and –
GINO’S PIZZA LTD., GINO’S PIZZA INC., BALJIT GANGAR, VICK DARUBRA, MARTIN BERNARD, REDWATER CAPITAL REALTY INC. and HAROON AMADI
Defendants
Mitchell Wine, counsel for the Plaintiff
John G. Morrissey, counsel for the Defendants
HEARD: IN WRITING
G. DOW, J.
REASONS FOR DECISION ON COSTS
[1] This matter proceeded to trial on damages on April 22 through April 25, 2019. I reserved my decision and issued reasons July 9, 2019 (2019 ONSC 4051). I ordered Gino’s Pizza Ltd. (“Gino’s Pizza”) pay Markham Village Shoppes Limited (“Markham Village”) $83,736.32 inclusive of damages and pre-judgment interest. If the parties did not agree on costs, I provided for written submissions to be filed with me on or before August 30, 2019.
[2] I received submissions from Markham Village set out in material dated August 29, 2019 seeking $61,111.13 inclusive of HST and disbursements which included a claim for substantial indemnity costs after April 17, 2019. Alternatively, Markham Village sought $48,949.70. I received submissions from Gino’s Pizza also dated August 29, 2019 seeking to pay $30,000.00 inclusive of fees, HST and disbursements. The material from Markham Village included a two page cover letter dated August 30, 2019 essentially containing reply submissions.
[3] The background of this dispute involved a 10-year lease beginning June 1, 2017 signed by Gino’s Pizza to rent space in a property on Main Street North in Markham owned by Markham Village. Gino’s Pizza repudiated its obligations under the lease within months after signing it. Markham Village brought a summary judgment motion in January, 2018. Justice Morgan concluded Gino’s Pizza was liable and ordered it to pay Markham Village $85,697.96 in damages (2019 ONSC 565). Costs were subsequently fixed in favour of Markham Village on March 9, 2019 in the amount of $32,000.00, all inclusive (2019 ONSC 1636).
[4] Gino’s Pizza appealed the quantum awarded. By the hearing date of August 31, 2018, Markham Village had re-rented the space. Gino’s Pizza sought to adduce this new evidence before the Court of Appeal. Markham Village had re-rented the premises within 10 months of Gino’s Pizza repudiation of the lease which was significantly less than the 22 months of additional rent ordered to be paid by Gino’s Pizza to Markham Village by Justice Morgan.
[5] On that basis, the Motion to adduce fresh evidence and appeal were allowed, the award was set aside and the matter returned to this Court “for a trial for the quantification of damages” (2018 ONCA 746). No costs were ordered payable with regard to the appeal (2018 ONCA 746).
[6] The costs before Justice Morgan to be awarded were also to be determined by “the Judge hearing the damages trial”. The plaintiff submitted the costs award of $32,000.00 made by Justice Morgan should be reordered because:
a) it reflected Markham Village having bettered its September 27, 2017 offer of $50,000.00 plus partial indemnity costs while taking into account other various factors set out in Rule 57.01;
b) the decision on liability was not appealed; and
c) recalculating the damages based on what I assessed still exceeded the $50,000.00 offer from September 27, 2017.
[7] This compared to Gino’s Pizza position that each side should bear its own costs up to the determination of the action by Justice Morgan. Gino’s Pizza relied on its success before the Court of Appeal to have the quantum of damages retried and submitted “the result of the appeal is that the plaintiff should not have been successful at the Summary Judgment motion with respect to damages”. I disagree. I read the reasons to be that the fresh evidence concerning re-renting of the premises significantly undermined the basis for the assessment and calculation made by Justice Morgan. That is, while the evidence before him was sufficient, the fresh evidence was better and more timely. The possibility remains the plaintiff may receive a windfall given the lease raised the potential commitment for Gino’s Pizza to pay rent until May 2027. The fresh evidence does not result in Justice Morgan having made an error in considering the evidence placed before him.
[8] I agree with the submissions on behalf of Markham Village and conclude the award of $32,000.00 ought to be and is re-ordered paid by Gino’s Pizza to Markham Village.
[9] As noted, Gino’s Pizza submitted the original summary judgment motions lacked sufficient evidence to asses the quantum given the events which followed. It was open to Gino’s Pizza to make that argument for Justice Morgan and, from paragraph 22 of Justice Morgan’s reasons, it appears that it did. Justice Morgan disagreed with that submission. Markham Village tendered the evidence it sought to rely on and was successful. It remains accurate that had Gino’s Pizza accepted the September 25, 2017 Offer to Settle by Markham Village, it would be in a better position than it faces at present.
[10] Finally, Justice Morgan was in a better position to assess the costs of the summary judgment motion and, in my view, Markham Village ought to recover its costs for that portion of this action in that amount.
[11] As indicated, subsequent to Justice Morgan disposing of his involvement on March 9, 2018 until the determination of the Court of Appeal Addendum of September 26, 2018, the Court of Appeal ordered no costs. Markham Village confirmed none are being sought.
[12] From September, 2018 to the present, Markham Village seeks substantial indemnity costs based on its April 16, 2019 Offer to Settle for $85,000.00 including interest plus partial indemnity costs of the action and other conditions. This is $1,263.68 more than the $83,766.32 I awarded. It relies on authorities which referenced Rule 39.13 that the Court may take into account any Offer to Settle in exercising its discretion regarding costs. I was referred to the comments of the Court of Appeal in Mortimer v. Cameron, 1994 CanLII 10998 (ON CA), [1994] O.J. No. 277 (C.A.) at paragraphs 64 to 69 that while Rule 49 establishes steps that can be taken to gain a costs advantage, it does not alter the basic premise that substantial indemnity costs are otherwise only ordered where there are special circumstances or in rare and exceptional cases. Otherwise, I should follow the principles enunciated in the Rules and common law. This remains the preferred approach as noted by the Court of Appeal in Elbakhiet v. Palmer, 2014 ONCA 544 at paragraph 31 where the court stated “there is no ‘near miss’ policy”. The court repeated its statement “the court should depart from rule 49.10 only in exceptional circumstances”.
[13] In this regard, Markham Village seeks to utilize what it described as perjury in the evidence tendered by Gino’s Pizza. This was based on the evidence of Martin Bernard, a now former employee of Gino’s Pizza who swore an affidavit on November 16, 2017 used in the summary judgment motion before Justice Morgan. He deposed the lease was not repudiated because Gino’s Pizza lost a prospective franchisee. This compared to the evidence of Dharmie Wilfred, the franchise and leasing manager for Gino’s Pizza for the past three years before me which was to the contrary.
[14] Having reviewed that material and evidence, I do not agree Ms. Wilfred and Mr. Bernard’s evidence amount to “perjury”. Ms. Wilfred was unaware of Mr. Bernard’s prior testimony or the allegations contained in the Statement of Defence, presumably prepared by counsel. This apparent contradiction in evidence related to the issue of liability. Liability was determined by Justice Morgan and not subject to any appeal. As a result, I conclude it has failed to meet the special circumstances required to merit an award of substantial indemnity costs.
[15] Similarly, while Markham Villages’ offer of April 16, 2019 of $85,000.00 may be considered under Rule 49.13, I prefer to incorporate and evaluate the plaintiff’s entitlement to costs on the basis of the factors enumerated under Rule 57.01.
[16] Gino’s Pizza also raised the expenses incurred in proceeding with a Chamber’s appointment regarding whether the Court of Appeal’s endorsement could be interpreted to contemplate another motion rather than a trial. Justice Nishikawa concluded the latter and reserved costs to the Judge hearing the trial. In my view, this was not unreasonable and I reject Gino’s Pizza request for costs of that appearance claimed in the amount of $1,497.25 (inclusive of HST).
[17] This matter was not particularly complex. There was no conduct which tended to lengthen the trial unnecessarily. There were no refusals to admit anything that ought to have been admitted. Markham Village was successful. My review of their time dockets between September 20, 2018 and April 29, 2019, which totaled $19,848.00, and used hourly rates of $310.00 to $330.00 per hour for partial indemnity costs, was reasonable. It is generally in accord with the Costs Outline submitted by Gino’s Pizza.
[18] Gino’s Pizza raised the total of the costs being sought as a percentage of the amount recovered. This submission relied on the reference made in Dang v. Anderson, 2017 ONSC 2150 at paragraph 8 where consideration was given to the statement in Elbakhiet v. Palmer, supra at paragraph 36 where the trial judge awarded costs “wholly disproportionate to the amounts recovered”. In that matter, the trial judge awarded $578,748.28 in costs following the jury’s award of $144,013.07 in damages. The Court of Appeal reduced the quantum of costs to $100,000.00 inclusive of fees, disbursements and HST (or, by my calculation, $69.4% of the damages). The Court of Appeal also repeated what I interpret to be the primary consideration to award what is fair and reasonable.
[19] Here, the amount sought by Markham Village and what must be in the reasonable expectation of Gino’s Pizza was the issues in disputes were determined at first instance on summary judgment and, after a successful appeal by Gino’s Pizza on damages, a second time following a three day trial.
[20] To that end, I award Markham Village fees of $19,848.00, disbursements of $930.97, and HST of $2,680.73 as claimed for a total of $23,461.17.
[21] In addition to $32,000.00 re-ordered be paid above, the total amount payable by Gino’s Pizza to Markham Village is $55,461.70 inclusive of fees, HST and disbursements.
Mr. Justice G. Dow
Released: November 6, 2019
COURT FILE NO.: CV-17-579044
DATE: 20191106
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MARKHAM VILLAGE SHOPPES LIMITED
Plaintiff
– and –
GINO’S PIZZA LTD., GINO’S PIZZA INC., BALJIT GANGAR, VICK DARUBRA, MARTIN BERNARD, REDWATER CAPITAL REALTY INC. and HAROON AMADI
Defendants
REASONS FOR DECISION ON COSTS
Mr. Justice G. Dow
Released: November 6, 2019