Court File and Parties
COURT FILE NO.: CV-19-00621537
DATE: 20200921
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Morguard Real Estate Investment Trust, Plaintiff
AND:
1168932 Ontario Limited, Defendant
BEFORE: C. J. Brown J.
COUNSEL: David Outerbridge, J. Toshach Weyman, Shalom Combo-Steinmetz for the plaintiff
Timothy Gindi for the defendant
HEARD: In Writing
COSTS ENDORSEMENT
[1] The plaintiff, Morguard Real Estate Investment Trust (“Morguard”), which was wholly successful in its motion for summary judgment in its action brought against 1168932 Ontario Limited (“116”) to enforce the settlement agreement executed on April 18, 2019, seeks its costs, on a substantial indemnity basis. My judgment, dated February 21, 2020, granted the plaintiff summary judgment, enforcing all of the settlement terms included in the settlement agreement.
[2] It is the position of Morguard that the motion and action should not have been necessary, that 116 overtly breached its settlement obligations, generating further unnecessary litigation and engaged in tactics found to have been intentionally dilatory, aimed at delaying judgment. It is the position of Morguard that, in all of the circumstances, substantial indemnity costs are warranted.
[3] Costs generally follow the event. Costs are intended to compensate the successful party to the litigation, wholly or in part, for legal expenses that the party has incurred. In general, costs are awarded on a partial indemnity basis. However, elevated costs or substantial indemnity costs are awarded, inter alia, where there is a finding of reprehensible, scandalous or outrageous conduct on the part of the party against which the costs award is being made: Mars Canada Inc. v Bemco Cash & Carry Inc., 2018 ONCA 239, paras 43-44; Toronto Star Newspaper v Fraleigh, [2011] O.J. No. 3689, 2011 ONCA 555, 2009 ONCA 722 (C.A.); Davies v Clarington (Municipality), [2009] O.J. No. 4236, 2009 ONCA 722 (C. A.), Walker v Ritchie, 2005 CanLII 13776 (ON CA), [2005] O. J. No. 1600, 12 CPC (6th) 51 (C.A.), rev’d on other grounds 2006 SCC 45, [2006] S.C.J. No. 45, [2006] 2 S.C.J. 428 (S.C.C.).
[4] Pursuant to the Courts of Justice Act and the Rules of Civil Procedure, this Court has wide discretion in awarding costs: Courts of Justice Act, RSO 1990, c. C. 43, s. 131; Rules of Civil Procedure, RRO 1990, Reg. 194, R. 57.01.
[5] The court has power to award costs on a substantial indemnity basis: R. 57.01(4)(c). Substantial indemnity costs awards are often granted when a party is forced to seek the court’s assistance to enforce a valid settlement agreement: Randy River Inc. v Mint Accessories Inc., 2018 ONSC 1215 paras. 45, 47; Argiris (In Trust) v Vradis, [2006] O.J. No. 3292, para 17.
[6] In the present case the following facts are important in determining whether substantial indemnity costs should be awarded:
The parties reached a settlement agreement that sought to end years of litigation, which emanated from a significant, long-standing environmental pollution matter, which had resulted in several lawsuits over the years between the landowners, lenders and Ministry of the Environment and to resolve an ongoing, serious environmental problem emanating from 116’s property;
The settlement agreement was entered into after a full day mediation, with an experienced mediator. Both parties had environmental advisors present, as well as designated representatives and experienced lawyers who had the authority to bind the parties. Further, the principals of 116 were contacted by their representatives on a number of occasions during the course of the day, as terms were being negotiated;
Despite the settlement agreement, 116 failed to honour any of the terms of the settlement, failed to advance settlement funds, failed to provide confirmation as regards relinquishment of trust funds, as agreed, and prevented Morguard from installing on 116’s property, the barrier proposed and agreed upon by the parties to resolve the environmental problem. Further, 116 advised its tenants to obstruct any attempts by Morguard’s agents to access the property in order to do the remedial work;
Morguard was required to issue and serve a statement of claim to enforce settlement. 10 days after Morguard brought the action, 116 entered into a secret deal to transfer its only asset in Canada to a non-arm’s length charity in a highly questionable transaction which Morguard only learned about by chance, forcing it to seek emergency relief;
Morguard was required to engage in constant vigilance to ensure that 116’s property was not transferred, both to preserve an important judgment asset and to preserve its right, which was against 116 only, to install the barrier between the properties;
The settlement dealt with long-standing pollution caused by 116 which had not only failed to take the steps agreed upon in the settlement agreement to help remediate the problem, but had actively blocked the plaintiff from taking any steps, including the erection of the barrier provided for in the settlement agreement. As a result of its refusal to permit workers on its property to construct the barrier, additional costs were incurred.
116’s former counsel sought to get off the record on the eve of the motion heard before me, which was unsuccessful, but which caused Morguard to prepare additional documentation for that motion. 116 had previously, on the earlier return date of the Mareva motion in December 2019, also sought to get off the record, in an attempt to delay judgment further which, based on all of the evidence, was a recurrent pattern throughout the course of the litigation.
At the motion, counsel for 116 attempted to seek an adjournment, which was not granted. He further stated that the defendants do not take issue with the agreement as regards the money or construction of the barrier, but that there may be more information that could be brought to light to assist 116, again attempting to delay mattes.
[7] The same underlying issues were in issue on a previous appearance before Madam Justice Roberts, on an existing preservation order against 116 which was continued as a Mareva injunction in aid of execution. I have reviewed her findings contained in her costs endorsement as well. However, this costs endorsement is based on all of the evidence contained in the motion for summary judgment before me.
[8] I find that the conduct of 116 throughout the proceedings has been deliberate, attempting to delay any judgment and, since the settlement agreement, any payment of the amounts owing and any fulfilment of the terms of the agreement to resolve the pollution problem. I find the conduct of 116 to be reprehensible.
[9] I am satisfied, based on the foregoing and on all of the circumstances, as well as on the conduct of 116 throughout the lengthy litigation, including its refusal to adhere to the terms of the settlement agreement without intervention by this Court, and its unnecessary conduct throughout this proceeding in its attempt to delay judgment, that substantial indemnity costs are warranted.
[10] I have reviewed the bill of costs of Morguard and find them to be fair and reasonable in all of the circumstances. I award costs to Morguard in the amount of $212,532.99, inclusive of HST and disbursements, payable forthwith along with the amounts owing pursuant to my decision of February 21, 2020.
Date: September 21, 2020