Court File and Parties

COURT FILE NO.: CV-20-00638983-000 DATE: 20200512 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: OnTheGoShipping Inc., and Kwok-Wai Leung, aka Harry Leung, Applicants AND: G. Khan Medicine Professional Corporation, Respondent

BEFORE: Gillian Roberts J.

COUNSEL: Peter Askew, for the Applicants Ronald Allan, for the Respondent

HEARD: May 12, 2020

Costs Endorsement

[1] The applicant leases premises from the respondent at 6882 Fourteenth Avenue in Markham which include a two-story heritage house, yard and garage (the premises). The applicant has also done some work for the respondent, but the parties do not agree on the nature of that work, or what, if anything, is owed in relation to it. The applicant has not been paying rent on account of what he says the respondent owes him. As a result, on March 24, 2020, a week after the Premier declared a state of emergency in Ontario due to COVID-19, the respondent locked the applicant out of the house on the premises.

[2] The applicant brought an application for a variety of relief, including a declaration that the Residential Tenancies Act, 2006, S.O. 2006, c.17 (the RTA) applies and governs the tenancy, that an interim injunction granted on March 26, 2020 restraining the respondent from interfering with his reasonable enjoyment of the premises continue, for damages he alleges the respondent caused on March 24, 2020 during the attempt to lock the applicant out, and an order that he is owed $22,428.23 in relation to the work he has done for the respondent.

[3] For its part, the respondent also sought a variety of relief, including a declaration that the Commercial Tenancies Act, R.S.O. 1990, c.L.7 (the CTA) applies and governs the tenancy, for an order for possession of the premises after the March 19, 2020 Order of Chief Justice Morawetz suspending all evictions and/or writs of possession is lifted, and an order that he is owed $26,732.39 in relation to unpaid rent.

[4] I heard the application on April 30, 2020. During the hearing, both parties agreed that it was appropriate to get an initial decision on the nature of the tenancy, as it is common ground that this Court only has jurisdiction over the remaining issues, which I will refer to collectively as "who owes what", if the tenancy is commercial. On May 4, 2020 I released my reasons concluding that the respondent failed to establish that the tenancy was commercial, thus the RTA applies, and the Landlord and Tenant Board (the LTB) has exclusive jurisdiction over all applications in relation to the tenancy, including the remaining issues of "who owes what" (OnTheGoShipping Inc. v. G. Khan Medicine Professional Corporation, 2020 ONSC 2789).

[5] The applicant now seeks substantial indemnity costs on the basis that they made an offer which largely mirrors what they achieved, and because the respondent has behaved in an outrageous matter requiring sanction by the court. The applicant has provided a cost outline setting out partial indemnity costs of $25,729.85, and substantial indemnity costs of $37,423.48.

[6] The respondent submits that this is not an appropriate case for an elevated cost award, and reminds me that only the preliminary jurisdictional issue was argued and decided, but the cost outlines reflect all the work that was done on the file. The respondent also submits that the applicant's costs are too high, noting their actual costs were only $23,218.74 ($14,308.69 on a partial indemnity basis), though they acknowledge that these costs only reflect the work done by current counsel, who came on to the file after three court appearances (March 26 and 27, and April 3). The respondent also submits that the applicant's costs are disproportionate to the relatively modest amounts at issue in this case, relying on Culligan Springs Ltd. V. Dunlop Lift Truck (1994) Inc..

[7] It is well-established that the fixing of costs is discretionary under s.131 of the Courts of Justice Act, R.S.O. 1990 c. C-43. This discretion is generally to be exercised in accordance with the factors listed in Rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. These factors include: the principle of indemnity for the successful party, the amount of costs an unsuccessful party could reasonably expect to pay, the amount claimed and recovered, the apportionment of liability, the complexity of the proceedings, the importance of the issues, conduct that tends to shorten or lengthen the proceedings, and whether any step or conduct was improper. Ultimately, in fixing costs, I must assess what is “fair and reasonable” in the circumstances, bearing in mind that compensation of the successful party must be balanced with the goal of fostering access to justice: Boucher v. Public Accountants Council (Ontario), 71 O.R. (3d) 291 (C.A.) at paras.26 and 37.

[8] It is also well-established that elevated costs are only warranted in two broad circumstances: first, where there is an offer to settle under Rule 49.10 of the Rules of Civil Procedure; second, where there is clear finding, based on evidence, of reprehensible, scandalous or outrageous conduct on the part of the party against which the cost award is being made: Davis v. Clarington (Municipality), 2009 ONCA 72.

[9] I do not think this is an appropriate case for an elevated cost award. While the applicant made two offers to settle, neither of them engage costs consequences pursuant to Rule 49.10. Nor do they closely resemble the outcome. Both offers sought to settle all the matters in dispute between the parties and both explicitly provided "This is an omnibus Rule 49 offer to settle and the terms contained herein can only be accepted in whole and not in part". As noted at the outset, my decision only dealt with the preliminary jurisdictional issue of the nature of the tenancy. All the other issues, which I collectively describe as "who owes what", remain to be decided. Moreover, the offers to settle provide that the LTB "shall determine" the nature of the tenancy, or this issue should be agreed by the parties; neither provide that it should be decided by this court. In this respect the offers are contrary to what I concluded. In addition, current counsel for the respondent has always agreed that no eviction should occur while the Chief Justice's moratorium on evictions is in place. Considered as a whole, in the circumstances, I do not think the offers are particularly significant to the question of costs.

[10] Nor do I think this is a case of reprehensible, scandalous or outrageous conduct by the respondent warranting an elevated costs award. While the respondent's conduct in attempting to lock out the applicant a week into the COVID-19 province-wide shut down would appear to come close to this standard, I do not believe there is sufficient basis to conclude that the standard was met in the circumstances of this case. I only decided the question of jurisdiction. My findings were limited to what was relevant and necessary to answer that question. I did not resolve the question of who owes what, which provides the context for the respondent's actions. It is true that the applicant warned the respondent that they would respond to any step to lock the premises with urgent court proceedings, and seek full indemnity costs. But the respondent had warned they would proceed with a lock-out if payment was not made. In addition, while I concluded that the respondent knew that the applicant was living at the premises, I do not doubt that, at the time of the attempted lock-out, the respondent believed that the tenancy was commercial, and the Chief Justice's moratorium on evictions did not apply. And that the tenant owed him money. Finally, I am mindful that the shut-down due to COVID-19 has put enormous strain on everyone: tenants and landlords alike. In short, in all the circumstances, I do not believe that I can conclude that the landlord behaved in an outrageous manner worthy of court sanction through an elevated costs award.

[11] At the same time, I do think this is an appropriate case for the applicant to be awarded costs. The applicant had to bring an emergency application for an interim injunction in order to remain in his home, and the injunction required an underlying court proceeding. I do not think it is appropriate to defer the cost of the emergency injunction, or my preliminary jurisdictional ruling, to the LTB, which will be deciding different issues (essentially who owes what and the implications of that for the tenancy). At the same time, much of the work done relates to the issues of who owes what, which I did not decide. For example, I understand that the longest of the first three court appearances was mainly devoted to attempting to settle issues related to who owes what. In addition, much of the cross-examinations, and the material put before me, related to who owes what. I did not decide these issues, and I do not think the work done on them should be reflected in the cost award. Moreover, the costs must also be reasonable and proportionate, bearing in mind the amount of money at stake in the litigation which I understand to be relatively modest (approximately in the area of $20,000). In all the circumstances, I conclude that the respondent should pay the applicant costs in the amount of $12,000.

[12] Notwithstanding Rule 59.05, this Endorsement is effective from the date it is made, and is enforceable without any need for entry and filing.

Gillian Roberts J. Date: May 12, 2020