COURT FILE NO.: CV-21-00660172

DATE: 20250504

ONTARIO SUPERIOR COURT OF JUSTICE

RE: PARKLAND CORPORATION, Applicant

-and-

SRAA INC., Respondent

BEFORE: F.L. Myers J.

COUNSEL: John C. Wolf and Brendan Jones, for the Applicant Howard D. Gerson, for SRAA Inc. and 1064110 Ontario Ltd.

READ: May 4, 2021

COSTS ENDORSEMENT

Background

[1] This endorsement applies as well to the application brought by Parkland against 1064110 Ontario Ltd. under Court File No. CV-21-659846.

[2] On April 19, 2021, for reasons reported at 2021 ONSC 2874, I granted two motions brought by Parklands for an interlocutory injunction against each respondent.

[3] Parkland asks for costs to be awarded in its favour on each of its motions on a substantial indemnity basis.

[4] At para. 111 of my prior endorsement, I required that the parties’ to file Costs Outlines:

Everyone who files submissions shall submit its Costs Outline whether it seeks costs or not.

[5] Despite this direction, the respondents chose not to favour the court with their Costs Outlines.

[6] I cannot put much weight on a party’s submissions about the reasonableness of the quantum of costs sought by its successful opponent when the party shields its own costs from comparison. This is doubly so when they ignore an express direct to do deliver a Costs Outline. I am left little choice but to infer that the costs incurred by the respondents were of the same order of magnitude as those incurred by the applicant.

[7] Costs of interlocutory injunction motions are most often reserved to the trial judge. This practice avoids:

… the possible injustice of awarding costs to a plaintiff for having succeeded in obtaining an order to protect his or her position pending trial when the outcome of the trial reveals that that plaintiff's position was not worthy of having been protected.

Quizno's Canada Restaurant Corporation v. 1450987 Ontario Corp., 2009 CanLII 31599 (ON SC), para. 10.

[8] But, where a trial is unlikely and the merits are clear (a strong prima facie case) there is less reason to defer the costs decision. When, added to that, the unsuccessful party’s position or behaviour was inappropriate and could call for a costs penalty, many courts have awarded costs when granting an interlocutory injunction. See: Amphenol Canada Corp. v. Sundaram, 2019 ONSC 2226, and the cases cited by my colleague Faieta J. at para. 9 of that decision.

[9] Parkland points to several features of these cases to claim costs on a substantial indemnity basis now:

i. Neither respondent advanced a credible legal basis to terminate their leases as they purported to do;

ii. Both respondents committed a deliberate trespass to try to evict Parkland during the term of its leases;

iii. Both respondents took steps after knowing that Parkland was attempting to arrange an urgent court hearing, and in the case of 1064110 Ontario Ltd., after a hearing had been scheduled. Both then tried to rely on the unilateral steps they took to argue that the status quo should be maintained as altered by them.

[10] While there was no injunction preventing the respondents from acting, there was no urgency to do so either. After purporting to terminate unilaterally, they then conducting business as usual with Parkland for two months. There

is no evidence of any externally driven basis for the timing of the respondents’ acts. It seems clear that they timed their acts and took their steps as tactics to enhance their positions in the court proceedings.

[11] The respondents advanced no legal basis to support an argument that they were entitled to terminate the respective leases and subleases. SRAA did not try to do so. 1064110 Ontario Ltd. had an argument about the renewal or lack of renewal of Parkland’s lease. But even if it is correct, Mr. Gerson acknowledged that there is still an existing lease at common law that cannot be summarily terminated as the landlord purported to do.

[12] One does not need to be subject to an injunction to know that evicting a tenant without grounds to terminate the lease is prohibited by law. The injunction adds an enforcement mechanism to the legal compulsion. But the compulsion already exists at law.

[13] It is not the breaches of lease per se that I find to be relevant to costs. Rather, what is relevant is the manner by which the respondents sought to carry out their acts. They tried to frustrate the applicant’s ability to get to court and to frustrate the court’s schedule by taking steps in face of known proceedings and trying unilaterally to alter the status quo before the court could hear the applicant.

[14] There is no reason why the issue of the respondents’ entitlement to terminate their leases could not have been brought to the court by them proactively. Instead, they chose to adopt the aggressive positions discussed in my prior endorsement to maximize their perceived strategic position and to maximize the difficulty faced by the applicant getting to court to enforce their rights before the eviction was a fait accompli.

[15] In my view, the conduct of the respondents was deliberate and high-handed. They aimed to try to frustrate Parkland’s ability to obtain relief in these proceedings. As such, in my view, their conduct was “reprehensible, scandalous or outrageous conduct” of the kind referred to in Young v. Young, 1993 CanLII 34 (SCC).

[16] The respondents submit that the applicant was able to use legal work in both proceedings so their accounts should reflect some efficiencies.

[17] I have looked at Parkland’s Costs Outlines. Although the SRAA case was first in time, the 1064110 Ontario Ltd. case reflects greater cost. There was an additional issue in the 1064110 Ontario Ltd. matter concerning the renewal of its lease. That matter also came on unexpectedly after the first matter was under way. It is not surprising that extra efforts were needed to ready it for hearing with the first matter. Counsel have split equally their time for final prep and attendance at the hearing. The time spent on materials in each case including factums appears reasonable even with some overlap. I note that there is no specific entry for research time. Either student or junior time has been omitted or research is included in Mr. Jones’s factum time in which case the time is very reasonable.

[18] The rates charged are well within market norms. The substantial indemnity rate is properly 90% of the full rate billed.

[19] The fixing of costs is a discretionary decision under section 131 of the Courts of Justice Act. That discretion is generally to be exercised in accordance with the factors listed in Rule 57.01 of the Rules of Civil Procedure. These include the principle of indemnity for the successful party (57.01(1)(0.a)), the expectations of the unsuccessful party (57.01(1)(0.b)), the amount claimed and recovered (57.01(1)(a)), and the complexity of the issues (57.01(1)(c)). Overall, the court is required to consider what is “fair and reasonable” in fixing costs, and is to do so with a view to balancing compensation of the successful party with the goal of fostering access to justice: Boucher v Public Accountants Council (Ontario), 2004 CanLII 14579 (ON CA), (2004), 71 O.R. (3d) 291, at paras 26, 37.

[20] Although SRAA claims that it is on the eve of insolvency and 1064410 Ontario Ltd. says that it is unable to compete given Parkland’s pricing, both chose the most aggressive, expensive option to make their points to Parkland. Parkland told them it would litigate. Plus, with 1064410 Ontario Ltd. seeming to jump onto SRAA’s bandwagon, the risk of a “run” on Parkland required it to litigate to protect its brand practically speaking.

[21] While hard-ball litigation tactics are no longer themselves a basis for awarding substantial indemnity costs, one who engages in this kind of aggressive litigation conduct must be taken to expect or should reasonably expect a response in kind.

[22] The question of whether the respondents were entitled to terminate the leases and subleases without notice as they purported to do is not likely to be litigated to a trial. No termination clause is relied upon. No breach of contract was alleged against Parkland. No notice of default under s. 19 (2) of the Commercial Tenancies Act or otherwise was even purportedly delivered. 1064410 Ontario Ltd. may have a continuing question of the duration of Parkland’s rights and whether the ROFR in its lease remains extant. If SRAA’s evidence about its financial status is true, it should be in insolvency proceedings before the claim against it goes much further.

[23] In my view therefore, this is a case in which costs ought to be awarded to the successful party at this stage. I exercise the discretion to award costs on a substantial indemnity scale in view of the findings above.

[24] Having reviewed both Costs Outlines as discussed above, I fix costs payable by 1064410 Ontario Ltd. at $58,000 all-inclusive and costs payable by SRAA at $45,000 all-inclusive. Both amounts are reasonable for the urgent tasks involved and are within the range of reasonableness that the respondents ought to have anticipated.

[25] As the parties are in ongoing relationships with debits and credits flowing regularly between them, I see no reason to defer this liability especially if one or both respondents are in dire economic straits. I do not want to create a de facto preference by deferring claims of one creditor. Therefore, I order the costs payable forthwith.

F.L. Myers J.

Date: May 4, 2021