Tharani Holdings Inc. v. Metropolitan Toronto Condominium Corporation No. 812

Court File No.: CV-19-618819 Date: 2020-01-10 Ontario Superior Court of Justice

Between: Tharani Holdings Inc., Applicant – and – Metropolitan Toronto Condominium Corporation No. 812, Respondent

Counsel: Victor Yee, for the Applicant Karen Kisiel, for the Respondent

Heard: In writing.

Endorsement on Costs

Sanfilippo J.

Background

[1] The Applicant, Tharani Holdings Inc. (“Tharani”), is the owner of three units of the Respondent, Metropolitan Toronto Condominium Corporation No. 812 (“MTCC 812”). On October 30, 2018, Tharani submitted a Request for Records to MTCC 812, pursuant to section 55 of the Condominium Act, 1998, S.O. 1998, c. 19 (the “Act”). When MTCC 812 did not comply with this Request, Tharani initiated an Application with the Condominium Authority Tribunal of Ontario (the “Tribunal”).

[2] On January 16, 2019, Tharani brought an Application in this Court, in file number CV-19-612714, for an Order that MTCC 812 be prohibited from holding its Annual General Meeting without first providing proper notice to the unit owners in accordance with the Act and, in any event, not before production of the List of Unit Owners, being one of the Requested Records. The relief sought in the Application was largely granted by Sossin J. on January 16, 2019, who also awarded Tharani its costs on a full indemnity basis, fixed in the amount of $6,175.74, all inclusive, to be paid within sixty (60) days (the “January 2019 Order”).

[3] On February 19, 2019, the Tribunal issued its decision: Tharani Holdings Inc. v. Metropolitan Toronto Condominium Corporation No. 812, 2019 ONCAT 3. The Tribunal ordered that MTCC 812 deliver to Tharani ten categories of Records, within thirty days, and that MTCC 812 pay Tharani costs in the amount of $2,000 (the “Tribunal Order”).

[4] MTCC 812 did not pay the cost award ordered by the January 2019 Order within the sixty-day time period required by that Order. MTCC 812 also failed to deliver the Requested Records or pay the cost award pursuant to the Tribunal Order within the thirty-day time period specified.

[5] On April 26, 2019, Tharani initiated this Application against MTCC 812 pursuant to section 134 of the Act and section 19 of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 (“SPPA”), to enforce compliance with the Tribunal Order including MTCC 812’s obligation to produce the Requested Records under section 55(3) of the Act.

[6] On May 16, 2019, MTCC 812 paid the cost award ordered by the January 2019 Order.

[7] This Application was returned for hearing on May 21, 2019 before Myers J., who granted an adjournment to August 20, 2019 at the request of MTCC 812 who had, at that time, just retained counsel. Myers J. fixed costs of that day at $500, reserved to the Judge hearing the Application. On August 20, 2019, the argument of this Application was rescheduled to December 3, 2019 due to a clerical error made by the Applicant in the Confirmation Form.

[8] By the time that this Application was returned for hearing on December 3, 2019, MTCC 812 had taken steps to comply with the Tribunal Order. From June 10, 2019 to August 1, 2019, MTCC 812 produced the Requested Records to Tharani in stages, with the result that the parties agreed that MTCC 812 had complied with the Tribunal Order by August 1, 2019.

[9] On December 3, 2019, Tharani sought a declaration that MTCC 812 breached the Tribunal Order by failing to deliver the Requested Records within the thirty-day period mandated by the Tribunal. MTCC 812 conceded that it did not deliver the Requested Records within thirty days as required by the Tribunal Order, while Tharani conceded that MTCC 812 had now delivered the Requested Records: indeed, had done so by August 1, 2019. Tharani sought its declaration against not only MTCC 812, the only party Respondent, but also two non-parties to the Application: the condominium manager and the condominium board members.

[10] I determined that the relief sought by Tharani against the Non-Parties could not be granted unless they were first joined in the Application and provided with notice of the relief being sought. I also determined that as the Requested Records have now been delivered by MTCC 812, but outside of the thirty-day time period mandated by the Tribunal Order, this Application for contempt was no longer necessary except for determination of the issue of costs.

[11] The parties jointly requested an opportunity to provide cost submissions in writing. On consent, I established a process for the delivery of written cost submissions, which has now been completed. I now provide my determination of the issue of costs of this Application.

The Parties' Positions

The Applicant's Cost Submissions

[12] Tharani submitted that it was required to bring this Application under section 134 of the Act – indeed had no option but to do so – because MTCC 812 did not comply with the Tribunal Order.

[13] Tharani contended that this was not an isolated instance of non-compliance, but rather stemmed from MTCC 812’s failure to comply with its October 30, 2018 request under section 55(3) of the Act, which requires that a condominium corporation permit an owner to “examine or obtain copies of the records of the corporation”. Tharani stated that when MTCC 812 failed to satisfy this request, it had to go to the expense of seeking an Order from the Tribunal, which was then enforceable as an Order of this Court in accordance with section 19(1) of the SPPA.

[14] Tharani thereby sought an award of costs on a full indemnity basis, in accordance with section 134(3)(b)(ii) of the Act. Tharani relied on the decision by Sossin J. in the January 2019 Order to grant costs of that Application on a full indemnity basis, contending that a similar cost determination ought to be made on this Application. Alternatively, Tharani sought costs on a full indemnity basis to August 1, 2019, when the Requested Records were delivered, and on a substantial indemnity or partial indemnity basis thereafter. In the further alternative, Tharani sought costs on a substantial indemnity basis throughout.

[15] In terms of the amount of costs, Tharani’s Cost Outline stated as follows:

(a) Fees to initiate this Application: $5,370.88 on a full indemnity basis; $4,296.71 on a substantial indemnity basis; $2,148.35 on a partial indemnity basis, all amounts inclusive of Harmonized Sales Tax.

(b) Fees for preparation and attendance at the May 21, 2019 Hearing: $3,007.50 on a full indemnity basis; $2,406.00 on a substantial indemnity basis; $1,203.00 on a partial indemnity basis, all amounts inclusive of HST.

(c) Fees for preparation and attendance at the August 20, 2019 Hearing: $2,379.78 on a full indemnity basis; $1,903.82 on a substantial indemnity basis; $951.91 on a partial indemnity basis, all amounts inclusive of HST.

(d) Fees for preparation and attendance at the December 3, 2019 Hearing: $5,753.96 on a full indemnity basis; $4,603.16 on a substantial indemnity basis; $2,301.59 on a partial indemnity basis, all amounts inclusive of HST.

(e) Disbursements: The Applicant submitted that it incurred disbursements of $3,085.03, inclusive of HST.

[16] The Applicant thereby contended that it sustained legal costs of $19,597.15 on a full indemnity basis ($16,512.12 in fees and $3,085.03 in disbursements); $16,294.72 on a substantial indemnity basis ($13,209.69 in fees and $3,085.03 in disbursements), and; $9,689.88 on a partial indemnity basis ($6,604.85 in fees and $3,085.03 in disbursements).

[17] The Applicant relied on an Offer to Settle the Application that it delivered on November 6, 2019 (the “Applicant’s Offer to Settle”). The Applicant proposed that MTCC 812 pay the Applicant’s costs fixed in the amount of $14,000, all inclusive, that MTCC 812 consent to an Order declaring that it failed to comply with the Tribunal Order, that MTCC 812 agree to demand reimbursement of the sum of $14,000 from the condominium manager, and that MTCC 812 undertake to sue the condominium manager for recovery of the sum of $14,000 within 30 days of non-compliance by the manager with the demand for reimbursement.

The Respondent's Costs Submissions

[18] MTCC 812 submitted that this Application was no longer necessary by August 1, 2019 as the Records Requested and ordered to be delivered by MTCC 812 pursuant to the Tribunal Order had by that date been produced. Accordingly, MTCC 812 contended that the Applicant ought to receive no costs for legal services incurred after August 1, 2019 because the relief sought by the Application had by that date been provided by the Respondent.

[19] On November 28, 2019, MTCC 812 delivered an Offer to Settle the Application, proposing to pay the Applicant the sum of $10,000, all inclusive. In exchange, MTCC 812 proposed that the Application be dismissed on consent and that the Applicant provide MTCC 812 with a full and final release of the issues raised by the Application (the “Respondent’s Offer to Settle”).

[20] MTCC 812 submitted that because the Applicant failed to accept the Respondent’s Offer to Settle, the Applicant should not be awarded any costs and the Respondent should be awarded costs on a partial indemnity basis. In terms of amount, the Respondent’s Cost Outline quantified costs on a partial indemnity basis of $18,026.71 ($17,442.68 in fees and $584.03 in disbursements, HST included). Alternatively, MTCC 812 claimed costs from August 2, 2019 to December 3, 2019 on a substantial indemnity basis, on the ground that the legal services incurred in relation to the Application were unnecessary after August 2, 2019. MTCC 812 quantified these costs in the amount of $13,398.23 ($12,814.20 in fees and $584.03 in disbursements, HST included).

[21] In the further alternative, MTCC 812 submitted that if the Applicant is awarded costs, the costs should only be to August 1, 2019, the costs should be on a partial indemnity basis and the amount of costs should be reduced by fifty percent (50%) as the Applicant was unsuccessful in seeking relief against the Non-Parties.

Analysis

[22] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43 provides that “the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.” Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, and applicable jurisprudence, provides a list of factors and considerations for the Court to consider in the exercise of its discretion.

Entitlement

[23] The general principle is that, absent special circumstances, “costs follow the event”: Yelda v. Vu, 2013 ONSC 5903, at para. 11; Bell Canada v. Olympia & York Developments Ltd., 17 O.R. (3d) 135 (C.A.). In Ehsaan v. Zare, 2018 ONCA 453, at para. 10, the Court of Appeal stated that the discretion not to award costs to a successful party “should be exercised sparingly” and the general rule that a successful party is entitled to costs “should not be departed from except for very good reasons”.

[24] I reject the submission by the Respondent that it should be awarded costs by reason of its production of the Requested Records, which occurred four months late, or by operation of its delivery, on November 28, 2019, of an Offer to Settle. I also dismiss the Respondent’s alternative submission that the Applicant should be deprived of any costs after August 1, 2019. I will explain why.

[25] First, the Respondent’s production of the Requested Records four months late cures only its breach of its obligation to deliver these Records to the Applicant but does not diminish the fact that its default in not delivering these Records within the time mandated by the Tribunal gave rise to this Application and its resultant costs. The Respondent took no steps until November 28, 2019 to compensate the Applicant for the costs it incurred in seeking compliance with the Tribunal Order, and as such, had not addressed the totality of the impacts that flowed from its failure to deliver the Requested Records within the time ordered by the Tribunal.

[26] Second, I do not accept that the Respondent’s Offer to Settle was a proper offer to settle under Rule 49 because it was not served more than seven days before the hearing of the Application, as required by Rule 49.03.

[27] Third, while the Applicant’s claim for relief against the Non-Parties was not granted, this aspect of the Application did not contribute materially to the record developed or its argument. The incremental costs attributable to this issue were negligible.

[28] By reason of its failure to deliver the Requested Records within the time mandated by the Tribunal Order, and the need for Tharani to bring the Application to achieve compliance, the Respondent has not established any basis on which I ought to exercise my discretion to award costs in its favour. I accept that the Applicant was successful in that this Application had the effect of enforcing the Respondent’s compliance with the Tribunal Order. I find that Tharani has established an entitlement to an award of costs payable by MTCC 812.

Amount of Costs

[29] I accept the Applicant’s submission that I should exercise my discretion to order costs on a full indemnity basis for the period in which the Respondent failed to deliver the Requested Records to the Applicant: namely, from inception to August 1, 2019. An award of costs on a full indemnity basis makes clear that there are ramifications for failing to comply with the Tribunal’s Order regarding the timing of the delivery of the Records and is consistent with the principles underlying section 134(3)(b)(ii) of the Act.

[30] The Respondent took steps to purge its non-compliance with the Tribunal Order and did so by August 1, 2019. The Respondent did not offer to pay costs to the Applicant until the eve of the return of this Application, such that the Applicant was required to continue to prosecute its Application solely on the issue of costs. As such, I exercise my discretion to award costs to the Applicant from August 1, 2019 onward on a partial indemnity basis.

[31] In making this determination, I have dismissed the Applicant’s submission that the Applicant Offer’s to Settle, delivered on November 6, 2019, entitles the Applicant to an award of costs on a substantial indemnity basis for costs incurred after the date of delivery of this offer to settle. The Applicant’s Offer to Settle proposed that the Respondent agree to bring an action against the condominium manager. The Applicant did not achieve this result and therefore did not meet the requirements of Rule 49.10.

[32] In reference to my analysis of the Applicant’s Cost Outline, legal fees on a full indemnity basis from inception of this Application to August 1, 2019 totals $8,378.38 ($5,370.88 + $3,007.50 [1]) and legal fees on a partial indemnity basis thereafter totals $3,253.50 ($951.91 + $2,301.59) for a total of $11,631.88 for legal fees. When combined with the disbursements of $3,085.03, this produces a total assessment of fees, disbursements and applicable taxes of $14,716.91.

[33] I find that this assessment is supported by application of the principles set out in Rule 57, as follows:

(a) Expectations of the Unsuccessful Party (Rule 57.01(1)(0.b)): MTCC 812 was required to pay costs on a full indemnity basis by the January 2019 Order. Accordingly, it could reasonably expect an award of costs on a full indemnity basis in the event that it was unsuccessful in this Application;

(b) Importance of the Issues (Rule 57.01(1)(d)): The issues raised by this Application were important to the Applicant as a unit owner, and important to the management of the condominium corporation;

(c) Conduct of any Party that Lengthened the Proceeding (Rule 57.01(1)(e)): The conduct of both parties served to lengthen the proceeding. The Respondent sought and was granted an adjournment of this Application on May 21, 2019, and the Applicant’s clerical error caused this hearing to be adjourned to December 3, 2019. These multiple attendances increased costs.

(d) Staffing of the Application (Rule 57.01(1)(0.a)): The hourly rates charged by the Applicant’s counsel are reasonable. The number of hours billed are not “manifestly unreasonable”, in that they are not “clearly excessive” and the matter was not “over-lawyered”: Basdeo v. University Health Network, at para. 7. The Cost Outline submitted by the Respondent ($29,738.03, all inclusive) was higher than the Cost Outline submitted by the Applicant ($19,597.13) such that the Applicant’s staffing was reasonable comparative to that considered necessary by the Respondent.

[34] My assessment of these factors is part of achieving the fundamental objective of quantification of costs which is to determine an amount that is fair, reasonable, and proportionate: Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.); Zesta Engineering Ltd. v. Cloutier, at para. 4. In Beaver v. Hill, 2018 ONCA 840, 143 O.R. (3d) 519, at para. 12, Nordheimer J.A. stated that “proportionality and reasonableness are touchstone considerations to be applied in fixing the amount of costs.”

[35] After analysis of all elements of Rule 57.01(1) and the principles underlying the exercise of my discretion under section 131 of the Courts of Justice Act and considering the objective that the quantification of costs be fair, reasonable, and proportionate, I conclude that the Applicant shall receive an award of costs, payable by the Respondent, in the amount of $14,716.91, all inclusive.

Disposition

[36] I award the Applicant, Tharani Holdings Inc., costs of this Application payable by the Respondent, Metropolitan Toronto Condominium Corporation No. 812, fixed in the amount of $14,716.91, all inclusive of fees, disbursements and applicable taxes.

Sanfilippo J.

Released: January 10, 2020

[1] This amount is inclusive of the $500 fixed by Myers J. as costs of the appearance on May 21, 2019.