Court File and Parties

Court File No.: CV-09-375202 Motion Heard: 2020-01-22 Endorsement Released: 2020-01-22 Written Costs Submissions Filed: 2020-03-13 Costs Endorsement Released: 2020-07-18 Superior Court of Justice – Ontario

Between:

METRO ONTARIO REAL ESTATE LIMITED Plaintiff

- and-

HILLMOND INVESTMENTS LTD. carrying on business as CENTRAL PARKWAY MALL Defendant

Before: MASTER M.P. McGRAW

Counsel: L. Galessiere (lgalessiere@cglegal.ca) -for the Plaintiff/Defendant by Counterclaim, Metro Ontario Real Estate Limited and the Defendant by Counterclaim, Metro Ontario Inc. (collectively, “Metro”)

J. P. McReynolds (jmcreynolds@srtslegal.com) -for the Defendant/Plaintiff by Counterclaim, Hillmond Investments Ltd. carrying on business as Central Parkway Mall (“HIL”)

Costs Endorsement Released: July 18, 2020

Costs Endorsement

I. Background

[1] As set out in my Endorsement dated January 22, 2020 (the “Endorsement”), Metro brought a motion to strike 2 paragraphs of HIL’s Reply and Defence to Counterclaim (the “Reply”). As a result of significant case management and discussions between counsel and their clients, the parties agreed to amended wording of the disputed paragraphs at court on the day of the motion. Both parties wished to seek costs and have filed written submissions pursuant to the timetable in the Endorsement.

[2] The motion arose from the Order of Justice Morgan dated June 6, 2017 (the “Order”) granting Metro’s appeal of a Master’s order. HIL delivered the Reply on August 20, 2019. Metro took the position that 2 paragraphs of HIL’s Reply contravened the Order as it related to the payment of rent with respect to the property at issue in this litigation.

[3] Metro requested that HIL amend or delete the 2 paragraphs. After discussions and exchanges between counsel in August and September 2019, HIL’s counsel advised on October 1, 2019 that HIL would not amend the paragraphs. Therefore, Metro brought this motion on November 29, 2019.

[4] Metro seeks costs of $10,944.63 on partial indemnity scale. HIL now submits that no costs should be awarded.

II. The Law and Analysis

[5] Section 131(1) of the Courts of Justice Act (Ontario) provides that subject to the provisions of an Act or the Rules of Civil Procedure, 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. In exercising its discretion to order costs, the court may consider the factors set out in Rule 57.01(1).

[6] The overriding principles in determining costs are fairness and reasonableness (Boucher v. Public Accountants Council for the Province of Ontario, 71 O.R. (3d) 291 (C.A.); Deonath at para. 21). The general rule is that costs on a partial indemnity scale should follow the event which should only be departed from for very good reasons such as misconduct of the party, miscarriage in procedure or oppressive or vexatious conduct of proceedings (1318706 Ontario Ltd. v. Niagara (Regional Municipality), 75 O.R. (3d) 405 (C.A.); 394 Lakeshore at para. 14).

[7] Costs rules serve five purposes: (1) indemnify successful litigants for the costs of litigation, although not necessarily completely; (2) facilitate access to justice, including access for impecunious litigants; (3) discourage frivolous claims and defences; (4) discourage the sanctioning of inappropriate behaviour by litigants in their conduct of the proceedings; and (5) encourage settlements (394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238 at para. 10; Deonath v. Iqbal, 2017 ONSC 3672 at para. 20).

[8] Metro submits that it is entitled to costs because it was wholly successful on the motion while HIL argues that success was divided. I reject these characterizations. The motion was not argued. Without a determination by the court, there is no success to assess. While costs are not typically awarded where a motion is settled on all issues except for costs, there are exceptional circumstances (Kearney v. Hill, 2017 ONSC 6306 at paras. 27-31; Muskala v. Sitarski, 2017 ONSC 2842 at paras. 5-12). These circumstances include cases where the parties have agreed to resolve the motion on all issues except for costs and where it is unlikely that the motion would have proceeded on consent without deferring costs (Kearney at paras. 28-30).

[9] Although the motion proceeded on consent, I am satisfied that exceptional circumstances exist and that costs should be awarded. Not only did the parties agree to settle the motion on all issues except for costs but it is unlikely that the motion would have proceeded on consent had costs not been deferred. In my view, having the substantive issues proceed on consent with costs submissions made in writing is consistent with Rule 1.04(1) and furthers the objective that costs awards should promote settlement, fairness to the parties, access to justice and proportionality (Cadieux (Litigation guardian of) v. Cloutier, 2019 ONCA 241 at paras. 21-25; Deonath at paras. 20-21). More specifically, it minimizes the use of limited court resources and limits further costs to the parties including by providing the parties with an opportunity after the motion is resolved to determine if costs can also be settled.

[10] In determining costs in the present circumstances, the primary factor is the conduct of the parties which contributed to the time and cost of the motion. In this regard, I conclude that HIL’s refusal to engage in discussions regarding amendments to the Reply until the day before the motion necessitated the motion and was the most significant contributing factor to the costs incurred by the parties. HIL could have proposed amendments to the Reply in August-October 2019 when Metro attempted to resolve the disputed issues. However, HIL refused to consider any amendments. Had HIL engaged Metro at this time or even before Metro brought the motion in late November 2019 and prepared materials, the motion may have been avoided and/or fewer costs would have been incurred. While Metro sought to strike the paragraphs, it was not until the day before the motion in response to proposed amendments in Metro’s Factum that HIL suggested its own amendments. This formed the basis for the case management and discussions the following day at court which ultimately led to a resolution.

[11] While I have concluded that Metro is entitled to some costs of the motion, I am not prepared to order costs in the amount which Metro seeks. The quantum requested is disproportionate for a motion of this nature resolved on consent where only 2 paragraphs were in dispute and the record was based largely on prior steps in the proceeding. Further, in assessing the reasonable expectations of the parties, contrary to Metro’s submissions, it is a material consideration that HIL sought $3,390 on a partial indemnity scale in its own Costs Outline.

[12] Based on all of the factors and circumstances, I conclude that it is fair, reasonable, proportionate, consistent with Rule 1.04(1) and within the reasonable expectations of the parties for HIL to pay costs to Metro fixed in the amount of $4,000 payable within 60 days.

Costs Endorsement Released: July 18, 2020

Master M.P. McGraw