Court File and Parties

Court File No.: CV-20-00000128-0000 Date: 2021/02/16 Ontario Superior Court of Justice

Between: PAUL J. TOPPING, Applicant And: HAROLD JUSTIN MICHAEL FOREMAN, Respondent

Counsel: J. Kennedy, for the Applicant P. Trenker, for the Respondent

Heard: February 5, 2021

Before: M.G. Ellies R.S.J.

Endorsement

[1] The applicant brought this application seeking to give legal effect to an agreement about a parcel of land that the respondent had failed or refused to sign. However, before the application could be heard, the respondent signed the agreement. The sole issue now before me is whether the applicant should be awarded his costs. I believe he should, but not in the amount sought. In order to understand why, it is necessary to set out more of the history of this matter than the amount at stake might justify.

[2] In 2004, the applicant agreed to buy a two-acre portion of property that was owned by the respondent’s parents at the time. However, because the unorganized township in which the property was located did not have a planning board, the parcel could not be severed under the Planning Act, R.S.O. 1990, c. P.13. Instead, the respondent’s parents agreed to lease the land to the applicant for 99 years. As part of the lease agreement, the parties agreed that there would be a 16-foot “road allowance” along the western edge of the leased property to allow the lessors to access the remainder of their property. The applicant later put in a driveway and built a house on the leased property.

[3] In 2014, the respondent’s parents transferred the property to the respondent.

[4] In 2016, in anticipation of the forming of a planning board, the parties began negotiating an agreement to sever the leased property, which they called a “Memorandum of Agreement” (the “MOA”), through their respective lawyers. The negotiations continued until 2019 and outlasted the applicant’s lawyer, who retired before they could be completed.

[5] In January 2020, having heard that Mr. Kennedy might be retained to replace the applicant’s retired lawyer, Mr. Trenker wrote to him by email to inquire as to whether this was true. In his message of January 6, Mr. Trenker advised that he thought that there was “one rather minor outstanding issue” left to be resolved between the parties.

[6] Mr. Kennedy wrote back, asking for more information on the outstanding issue. He wrote again in February and in March, requesting a response. By April 28, 2020, he still had not received a reply. Accordingly, he wrote again on that date, advising Mr. Trenker that he would be seeking instructions to commence legal proceedings.

[7] Mr. Trenker wrote back the very next day. In his letter he said that he thought the issue had been resolved “more or less” and asked if Mr. Kennedy had yet received the previous lawyer’s file. Mr. Trenker, too, wrote several times before receiving a response. On May 15, 2020, Mr. Kennedy advised that he had received the file.

[8] The paper trail goes cold at this point. There is no evidence as to what happened between Mr. Kennedy’s letter of May 15 and the commencement of the application on August 19, 2020, apart from the applicant’s sworn statement that the respondent “failed or refused to sign” the MOA.

[9] In the application, the applicant sought a number of orders, including:

(a) an order “to enforce” the MOA; (b) an order to compel the parties to sign the MOA; and (c) a declaration that MOA is binding.

[10] In addition, the applicant sought “an Order that if any of the relief sought is opposed, then the Respondent shall pay legal costs … on a substantial indemnity basis”.

[11] The relief sought was, indeed, opposed. The respondent served a notice of appearance on September 3, 2020. On November 24, 2020, he served an affidavit sworn on October 30, 2020, by a staff member, to which the deponent attached correspondence between the lawyers for the parties that the applicant had not appended to his. All of the correspondence pre-dates Mr. Kennedy’s letter of May 15.

[12] The paper trail picks up again only near the end of the story. As it turns out, the unresolved issue related to the road allowance I mentioned earlier. During negotiations in 2019, the respondent had proposed a term that allowed the applicant to close the road allowance as part of the severance process. The applicant’s previous lawyer was of the view that this was not necessary because the allowance had never been registered on title and proposed instead that, if the severance was granted, the parties simply agree that there is not to be a road allowance.

[13] This proposal was ultimately accepted by the respondent. On December 9, 2020, Mr. Trenker wrote to Mr. Kennedy to say that they now had an agreement incorporating this term and to request that Mr. Kennedy provide copies of the MOA signed by the applicant. These were provided by Mr. Kennedy and were later also signed by the respondent. Mr. Trenker took the position in his letter of December 9 that there was no agreement until the respondent signed the MOA and offered on behalf of his client to consent to a dismissal of the application without costs. That offer was not accepted. And so, the previously unresolved issue has been replaced by a new one: should the applicant be awarded his costs?

[14] Mr. Trenker takes the same position before me that he took with Mr. Kennedy. He argues that, in order to be awarded costs, the applicant must show that he would have won the application. He submits that the applicant could not have won, because the parties had not agreed with respect to the road allowance until his letter of December 9. With respect, I disagree. The bar is much lower.

[15] Although it has not been characterized this way by either lawyer, what we are dealing with is an abandoned application. Ordinarily, when an application is abandoned, the respondent is entitled to his costs. Rule 38.03(3) of the Rules of Civil Procedure provides:

Where an application is abandoned or is deemed to have been abandoned, a respondent on whom the notice of application was served is entitled to the costs of the application, unless the court orders otherwise.

[16] A similar rule applies to abandoned motions: r. 37.09(3) of the Rules of Civil Procedure.

[17] Courts have denied responding parties their costs where proceedings have been abandoned through no fault of the party who commenced them, provided that the proceedings were not frivolous or vexatious and that it was reasonable to have commenced them: Provincial Crane Inc. v. AMCA International Ltd., 1990 CarswellOnt 369 (H.C.) at paras. 18-19; Morley v. Morley, 2013 ONSC 1595, at para. 47. Thus, the threshold for an order other than that called for under r. 38.03(3) is a low one. The applicant is not required to prove that he would have succeeded, only that he could have.

[18] In cases such as Provincial Crane and Morley, where the proceeding was abandoned due to events occurring after it was commenced that were outside of the parties’ control, the courts have held that each party should bear its own costs. However, where proceedings that were neither frivolous nor vexatious have been abandoned due to the acts of the responding party occurring after the proceedings were commenced, courts have not only refused to saddle the abandoning party with costs, but they have ordered that costs be paid by the responding party: Tayts v. Fox, 2019 ONSC 5709 (Master).

[19] The application in this case was neither frivolous nor vexatious. It was reasonable for the applicant to turn to the court for help. It would have been open to a court to conclude that the one “minor outstanding issue”, as Mr. Trenker called it, was not an essential term and that there was more than a mere agreement to agree here: Bawitko Investments Ltd. v. Kernels Popcorn Ltd. (1991), 79 D.L.R. (4th) 97 (Ont. C.A.) at 103-4; Bogue v Bogue (1999), 46 O.R. (3d) 1 (Ont. C.A.), at para. 12.

[20] Mr. Trenker argues that awarding the applicant his costs will have the effect of punishing the respondent for finally agreeing and act as a disincentive to parties who might otherwise settle issues pending the outcome of an application. However, I see it differently. Awarding the applicant his costs will act as an incentive to settle before the application becomes necessary. There is no explanation as to why the respondent waited until after the application was issued – and opposed – to do what he did later.

[21] But the lack of an explanation works both ways. Neither party has provided any evidence of what happened between Mr. Kennedy’s May 2020 letter and Mr. Trenker’s letter of December 9, 2020. Thus, there is no basis upon which I might be persuaded to award costs on a substantial indemnity scale. Instead, I would award costs on a partial indemnity scale. Unfortunately, Mr. Kennedy has not submitted a partial indemnity bill of costs. Instead, he has submitted only a substantial indemnity bill of costs in the amount of $5,263.94, all-inclusive. Applying the rule that partial indemnity costs are usually two-thirds of substantial indemnity costs (see the definition of “substantial indemnity costs” in r. 1.03(1)), and rounding off for the sake of convenience, I believe a fair and reasonable amount to award for partial indemnity costs would be $3,500, and I order the respondent to pay these costs forthwith.

M.G. Ellies R.S.J. Released: February 16, 2021