Landont Limited v. Frontenac Condominium Corporation No. 11

Court File No.: CV-19-00000033-0000 Date: 2021-06-10 Ontario Superior Court of Justice

Between:

Landont Limited Applicant

– and –

Frontenac Condominium Corporation No. 11 Respondent

Counsel: Kurt Pearson and Sarah McCarthy, for the Applicant, Landont Limited Antoni Casalinuovo, for the Respondent, Frontenac Condominium Corporation No. 11

And Between:

Court File No.: CV-19-0018

Frontenac Condominium Corporation No. 11 Applicant

– and –

Landont Limited Respondent

Counsel: Antoni Casalinuovo, for the Applicant, Frontenac Condominium Corporation No. 11 Kurt Pearson and Sarah McCarthy, for the Respondent, Landont Limited

Heard in Kingston: in writing

Before: Mew J.

Costs Endorsement

[1] This costs decision addresses the costs of two mirror-image applications concerning a dispute about certain rights and responsibilities arising from the use and maintenance of a commercial condominium unit. The subject unit includes a commercial parking garage.

[2] The protagonists are, respectively, the condominium corporation (FCC 11) and a company that owns what is the only commercial unit in an otherwise residential building (Landont).

[3] In my reasons for decision, reported at 2021 ONSC 2069, I concluded, on the issue of costs, that I was provisionally of the view that each party should bear its own costs. Both FCC 11 and Landont enjoyed a degree of success, but neither prevailed. However, I invited the parties, if they disagreed with that disposition, to provide me with written submissions on the issue of costs. Landont did disagree and, hence, costs submissions have now been received.

[4] Landont seeks payment of its costs on a partial indemnity basis in the all-inclusive amount of $58,536.84. Landont argues that it was substantially successful on the major issue in the application. Landont also submits that it would be inequitable for it to be required to pay, in effect, legal costs for both sides of a dispute, as a result of Landont being responsible for 15.226 percent of the common element expenses of FCC 11, which would ordinarily include legal expenses incurred by FCC 11.

[5] FCC 11 takes the position that success on the applications was divided and that no costs should be awarded. Landont did not make an offer to settle which matched or achieved an outcome that was more favourable than the court’s decision. And an order relieving Landont of the responsibility to contribute common element expenses used to pay FCC 11’s legal fees would be contrary to s. 84 of the Condominium Act, 1998, S.O. 1998, c. 19.

[6] FCC 11 also submits that Landont should be disentitled to costs as a result of its refusal to participate in a mediation of the disputes between the parties.

[7] Landont refers to an offer to settle that it made on 8 July 2019. It is not suggested that the offer engages the costs consequences of Rule 49.10. But Rule 49.13 permits the court to take into account any offer to settle made in writing.

[8] The essence of Landont’s proposal was that FCC 11 would be responsible for all costs relating to replacement of the membrane and any associated repair costs with respect to the concrete slab in the commercial unit parking garage; that FCC 11 should pay Landont $2,966.87 representing reimbursement of a lien registered by FCC 11 against Landont’s title to the unit in respect of power washing the floor of the commercial garage in October 2018; and that FCC 11 should contribute $20,000 towards Landont’s legal costs if the offer was accepted 72 hours prior to the commencement of cross-examinations or, failing that, FCC 11 should pay costs to Landont on a partial indemnity basis, to be agreed upon or assessed.

[9] Landont submits that it effectively “beat” this offer since it prevailed on the costs to repair/replace of membrane issue.

[10] Even if I were to ignore all of the other elements of Landont’s offer, not all of which it prevailed on, the fact is that it did not “beat” its offer. A “near miss” would not have been enough to trigger the costs consequences of Rule 49.10. As a general principle, uncertainty or lack of clarity in an offer may impede a party’s efforts to show that the outcome it obtained was as favourable as the terms of the offer to settle.

[11] Furthermore, Landont clearly did not prevail in respect of one of the elements of its offer, in that FCC 11 had no obligation to reimburse Landont the sum of $2,966.87 paid by Landont to discharge the condominium lien which FCC 11 had registered against Landont.

[12] Accordingly, I do not accept Landont’s assertion that it “beat” its offer. When I take into account other factors, Landont’s offer does not weigh heavily in the costs equation.

[13] I then turn to whether there was divided success.

[14] In paragraph 4 of my reasons for decision, I observed that:

Although there are a number of subsidiary disputes between the parties, the principal controversy turns on whether a waterproofing membrane applied to the top of the upper surface of the concrete slab forms part of the concrete floor, or falls within the boundaries of Landont’s unit.

[15] This issue was resolved in Landont’s favour. However, FCC 11 prevailed on a number of other issues, which, despite being subsidiary, could be regarded as having a cumulative effect on the overall outcome, including:

i. The validity of the condominium lien; ii. The authority of FCC 11 to conduct inspections and carry out preventative maintenance in Landont’s unit, including levying charge backs to Landont; iii. Landont’s responsibility to maintain its unit in good order including taking steps to mitigate against wear and tear; and iv. Landont not being entitled to compensation for alternative parking during repair and maintenance of the concrete slab and membrane by FCC 11.

[16] Furthermore, Landont’s refusal to participate in mediation should not be ignored. Indeed, it appears that arrangements for a mediation were underway before Landont announced that it would not be participating.

[17] There is no requirement for parties to proceedings brought by way of application to mediate their disputes. It is hard to gauge whether mediation in this case would have avoided proceedings that the parties, collectively (according to their bills of costs) spent over $170,000 on. In appropriate cases, the court can, nevertheless, take into account a party’s refusal to mediate when determining the issue of costs: see, for example, David v. TransAmerica Life Canada (2016), 2016 ONSC 1777, 131 O.R. (3d) 314, at para. 97. I would, however, disagree with the submission by FCC 11 that Landont’s refusal to mediate is, in and of itself, a sufficient basis to deny Landont its costs.

[18] The Court of Appeal has discouraged courts from making distributive orders for costs whereby major issues are identified and the party who was successful on each issue is awarded costs for the time and expense attributable to that issue: Oakville Storage & Forwarders Ltd v. Canadian National Railway (1991), 1991 7060 (ON CA), 5 O.R. (3d) 1 at paras. 13 and 17.

[19] And in Iona Corp. v. Aurora (Town) (1991), 1991 7278 (ON SC), 3 O.R. (3d) 579 (Gen. Div.), the court found that while the plaintiff in that case had been more successful on a summary judgment motion than the defendant, there had nevertheless been divided success and, for that reason, and in view of the novelty of the motion (which involved a defendant moving to strike out a motion for summary judgment without prejudice to the plaintiff bringing a further motion for summary judgment upon completion of the cross-examination of a witness), there should be no costs.

[20] In the present case, adapting the approach taken by Steele J. in Iona, I conclude that while Landont may have prevailed on the principal issue in contention between the parties, overall, there has been divided success.

[21] For the foregoing reasons, including the refusal of Landont to engage in mediation, I have concluded that each party should bear its own costs.

[22] Landont, of course, says that even if it has to bear its own costs, it should not also, as a unit-holder of the condominium corporation responsible for 15.226 percent of the common element expenses, be responsible for a portion of the legal fees spent by FCC 11.

[23] While there may be some sympathy for Landont’s predicament at a superficial level, given that Landont, as the only owner of a commercial unit of FCC 11, is responsible for a much larger percentage of the common element expenses than any other unit-holder, this is something that Landont would have been aware of throughout the litigation. Landont has its rights and remedies under the Condominium Act in the same manner as any other unit-owner. It has the right to vote at annual and special general meetings of the condominium corporation and to participate in the election of members of the board. It would have been aware from its own legal spend what FCC 11 was likely spending. And, as FCC 11 points out, a disposition which has the effect of waiving Landont’s responsibility to contribute its proportionate share to common element expenses would amount to a breach of s. 84 of the Condominium Act.

[24] I therefore decline to make any adjustment to the award of costs to take into account the fact that, in addition to paying its own legal fees, Landont, as a unit owner, will also be responsible for a share of the condominium corporation’s legal fees.

Mew J.

Released: 10 June 2021