Court File and Parties

Court File No.: CV-19-632763 Date: 2021-06-16 Superior Court of Justice - Ontario

Re: Tabriz Persian Cuisine Inc. And: Highrise Property Group Inc.

Before: J.T. Akbarali J.

Counsel: Esmaeil Mehrabi, for the plaintiff Angela Assuras, for the defendant

Heard: In writing

Endorsement

[1] On June 3, 2021, I released reasons in the trial of this action, dismissing the plaintiff’s action: 2021 ONSC 4065. These reasons deal with costs.

[2] On April 26, 2021, the defendant delivered a r. 49 offer, offering to dismiss the plaintiff’s claim without costs if the offer was accepted by April 30, 2021, after which costs would be payable on a partial indemnity scale. The defendant argues that it beat or matched its offer to settle, and thus claims its costs on a partial indemnity scale up to April 30, 2021, and on a substantial indemnity scale thereafter.

[3] The defendant estimates its fees on this scale to be $35,441, plus HST and disbursements, significantly higher than the plaintiff’s fees, which total $22,464 if measured on a substantial indemnity scale throughout.

[4] The plaintiff argues that this is an appropriate case to make an order that the parties bear their own costs. It argues that, although unsuccessful, it raised legitimate issues, some of which raised questions of law that were unsettled. In particular, it argues that there was no law on the question of whether a landlord’s withholding of consent for an assignment is unreasonable where a landlord’s reasons for withholding consent are reasonable in part, and unreasonable in part. It also argues that it needed to clarify whether the defendant’s demand that the plaintiff withdraw its litigation was a collateral benefit it was seeking. The plaintiff also makes submissions about the quantum of costs, arguing that the amount claimed is excessive and unreasonable.

[5] The three main purposes of modern costs rules are to indemnify successful litigants for the costs of litigation, to encourage settlement, and to discourage and sanction inappropriate behaviour by litigants: Fong v. Chan (1999), 1999 2052 (ON CA), 46 O.R. (3d) 330, at para. 22.

[6] Subject to the provisions of an Act or the rules of court, costs are in the discretion of the court, pursuant to s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. The court exercises its discretion taking into account the factors enumerated in r. 57.01 of the Rules of Civil Procedure, including the principle of indemnity, the reasonable expectations of the unsuccessful party, and the complexity and importance of the issues. Overall, costs must be fair and reasonable: Boucher v. Public Accountants’ Council for the Province of Ontario, 2004 14579 (Ont. C.A.), 71 O.R. (3d) 291, at paras. 4 and 38. A costs award should reflect what the court views as a fair and reasonable contribution by the unsuccessful party to the successful party rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), 2002 CarswellOnt 4020, 118 A.C.W.S. (3d) 341 (C.A.), at para. 4.

[7] The plaintiff argues that, from a costs perspective, this case is similar to Rabin v. 24909818 Ontario Inc., 2021 ONSC 3265, which was relied upon by the defendant at trial. There, Perell J. concluded that the landlord, although technically the successful party, was far from vindicated. Although he did not grant the requested relief under the Commercial Tenancies Act, 1990, R.S.O. 1990, c. L.7 in that case, Perell J. dismissed the application without prejudice, and allowed it to be re-opened before him on certain conditions. He held, “[t]he litigation conduct of both parties, which was driven by mistrust of one another, was not laudatory.” He exercised his discretion to make an order of no costs.

[8] In my view, the Rabin decision is not useful in this case. It is apparent that Perell J. was considering the litigation conduct of both parties or, put another way, the unreasonable behaviour of both parties in the litigation. Here, the parties did not behave unreasonably in the litigation.

[9] However, this case is like Rabin in one way: the defendant was the successful party, but its conduct was not vindicated at trial. I found that it sought to secure an improper collateral benefit by withholding its consent to the transfer of the lease. It is likely that, had it not done so, the legitimate bases it had to withhold consent would have been resolved between the parties. The plaintiff is correct that there was no law that the parties could find that dealt with a situation where a landlord had both reasonable and unreasonable grounds to withhold consent to a transfer of a lease.

[10] At the same time, the plaintiff never served an offer to settle. Had it done so, it may have been possible to resolve matters between the parties without a trial.

[11] In this case, the parties’ mistrust of each other has been a barrier to reaching reasonable commercial solutions to their problems. The result is that each has spent time and money on the dispute that could have been avoided. While all the purposes of costs rules are important, I note that the goal of encouraging settlements is particularly important in this case, given the fact that neither party has taken the steps they could have to resolve the dispute in a commercially sensible manner.

[12] With respect to the amount of costs claimed, I agree with the plaintiff that the defendant’s costs are outside of its reasonable expectations. While the recent retainer of new counsel for the defendant was necessary due to illness of its previous counsel, there was necessarily some duplication of effort that cannot be laid at the feet of the plaintiff.

[13] In light of all of the circumstances, I am of the view that a costs award of $15,000 all-inclusive in favour of the defendant is fair and reasonable. The plaintiff shall pay costs of $15,000 to the defendant within thirty days.

J.T. Akbarali J.

Date: June 16, 2021