COURT FILE NO.: CV-19-00630752-0000
DATE: 2021/02/04
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
BLOOR PARLIAMENT (BLOCK A) INVESTMENTS LIMITED and BLOOR PARLIAMENT (BLOCK B) INVESTMENTS LIMITED
Applicants
- and -
SHERBOURNE RESIDENTIAL (CONCERT) LP, by its general partner SHERBOURNE RESIDENTIAL (CONCERT) GP INC.
Respondent
Counsel: William A. Chalmers for the Applicants Eli D. Mogil and Brendan Smith for the Respondent
APPLICATION UNDER sub-rules 14.05(3)(d), 14.05(3)(g) and 14.05(3)(h) of the Rules of Civil Procedure, R.R.O. 1990, Regulation 194
HEARD: In writing
REASONS FOR DECISION - COSTS
PERELL, J.
[1] The Applicants, Bloor Parliament (Block A) Investments Limited and Bloor Parliament (Block B) Investments Limited (collectively “Bloor Parliament”), and the Respondent, Sherbourne Residential (Concert) LP, a limited partnership whose general partner is Sherbourne Residential (Concert) GP Inc., are land developers. Bloor Parliament sold a property in downtown Toronto to Sherbourne Residential. The Agreement of Purchase and Sale had a holdback of $2 million of the purchase price with respect to Sherbourne Residential’s obligation to provide parkland to the City of Toronto or to make a cash-in-lieu payment. Bloor Parliament asserted that the holdback was payable. This was denied by Sherbourne Residential. Bloor Parliament brought a motion to determine whether the holdback was payable. I dismissed Bloor Parliament’s Application.[^1]
[2] Sherbourne Residential, which made an offer to settle, seeks costs on a partial indemnity basis to the date of the offer and costs at substantial indemnity thereafter. It seeks $111,807.08 in fees, $14,870.43 in disbursements, plus HST for a total claim of $143,145.58. Bloor Parliament submits that the appropriate award should be $59,974.19.
[3] For the reasons that follow, I award $75,000, all inclusive.
[4] In the immediate case, the Offer to Settle does not entitle Sherbourne Residential to costs on a substantial indemnity costs because under rule 49.03 of the Rules of Civil Procedure[^2] “where the offer to settle is made less than seven days before the hearing commences, the costs consequences referred to in rule 49.10 do not apply,” which is the situation in the immediate case.[^3]
[5] Costs in the immediate case should be on a partial indemnity basis.
[6] I disagree with Sherbourne Residential’s submission that in assessing costs in the immediate case, the court should consider Bloor Parliament’s refusal to enter in settlement discussions about the matter of costs as a matter relevant to the determination of costs.
[7] Firstly, factually there was no refusal to negotiate in the immediate case; rather time to respond to Sherbourne Residential’s offer ran out over the December holiday break. Secondly, as a matter of principle, apart from the offer to settle rule, generally speaking, I do not regard whether there were good faith negotiations about settlement about costs a matter about which the court should adjudicate when determining costs. Thirdly, as a matter of principle, costs awards generally do not include costs associated with the determination of costs, including the preparation of costs submissions unless there are unusual circumstances relating to the preparation of costs submissions.[^4]
[8] Bloor Parliament does not dispute that Sherbourne Residential is entitled to disbursements of $16,803.59. The matter of Sherbourne Residential’s claim for legal costs is a matter to be resolved in accordance with the normal principles that govern the assessment of costs.
[9] The court’s discretion in awarding costs arises under the authority of s. 131(1) of the Courts of Justice Act,[^5] and is to be exercised by a consideration of the factors in rule 57.01(1) of the Rules of Civil Procedure. These factors include the principle of indemnification, the reasonable expectations of the parties, the complexity of the proceeding, the importance of the proceeding, and the conduct of the parties in litigation.
[10] The traditional discretionary principles developed for costs awards are codified in rule 57.01(1), which states:
Factors in Discretion
57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party’s denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding, or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and
(iii) any other matter relevant to the question of costs.
[11] The most general rule about costs, not to be departed from without good reason, is that costs at a partial indemnity scale follow the event, which is to say that normally costs are ordered to be paid by the unsuccessful party to the successful party on a partial indemnity scale.[^6]
[12] A critical controlling principle for the awarding of costs is that the sum awarded reflect the fair and reasonable expectations of the unsuccessful litigant.[^7] The overriding principle in awarding costs is reasonableness.[^8]
[13] The assessment of reasonableness is discretionary and very much dependent upon the circumstances of each case. In some cases, it may be reasonable for the successful party to make exhaustive efforts and to commit enormous legal resources, and in those cases, it might be said that the unsuccessful party could reasonably expect to pay those costs. In other cases, however, the successful party may have been well served by giving his or her lawyer instructions to make exhaustive efforts, but it might be disproportionate and unreasonable to expect the unsuccessful party to pay those costs, even if he or she would have expected or anticipated that his or her foe would have marshalled those legal resources.[^9]
[14] In Davies v. Clarington (Municipality)[^10] at para. 52, Justice Epstein stated that the overriding principle in awarding costs is reasonableness. She stated:
- As can be seen, the overriding principle is reasonableness. If the judge fails to consider the reasonableness of the costs award, then the result can be contrary to the fundamental objective of access to justice. Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant. In Boucher [Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.)], this court emphasized the importance of fixing costs in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding at para. 37, where Armstrong J.A. said: "[t]he failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice."
[15] For reasons set out in considerable detail in its written costs submissions, Bloor Parliament submits that the costs claim for legal fees in the immediate case is excessive and unreasonable, which it attributes in large part to the multiple timekeepers that were engaged by Sherbourne Residential and by redundancies in the delivery of legal services.
[16] Bloor Parliament’s argument persuades me that a substantial amount of the legal services in the immediate case are of the type that, while they may be valuable to the client, are not an expense that should be paid by the losing party unless costs are awarded on a substantial or full indemnity scale, which they are not in the immediate case.
[17] I think, however, that the approximately $60,000, all inclusive, award suggested by Bloor Parliament is unreasonably low. In my opinion, costs that are fair and reasonable and within the reasonable expectations of the unsuccessful litigant are $75,000, all inclusive.
[18] Order accordingly.
Perell, J.
Released: February 4, 2021
COURT FILE NO.: CV-19-00630752-0000
DATE: 2021/02/04
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
BLOOR PARLIAMENT (BLOCK A) INVESTMENTS LIMITED and BLOOR PARLIAMENT (BLOCK B) INVESTMENTS LIMITED
Applicants
- and -
SHERBOURNE RESIDENTIAL (CONCERT) LP, by its general partner SHERBOURNE RESIDENTIAL (CONCERT) GP INC.
Respondent
REASONS FOR DECISION - COSTS
PERELL J.
Released: February 4, 2021
[^1]: Bloor Parliament (Block A) Investments Limited v. Sherbourne Residential (Concert) LP, 2020 ONSC 7597. [^2]: R.R.O. 1990, Reg. 194. [^3]: König v. Hobza, 2015 ONCA 885. [^4]: Mcdonald v. Anishinabek Police Service, [2007] O.J. No. 424 at para. 30 (Div. Ct.). [^5]: R.S.O. 1990, c. C-43. [^6]: McCracken v. Canadian National Railway, 2012 ONSC 6838; Hague v. Liberty Mutual Insurance Co., 2005 CanLII 13782 (ON SC), [2005] O.J. No. 1660 (S.C.J.); Pike's Tent and Awning Ltd. v. Cormdale Genetics Inc. (1998), 27 C.P.C. (4th) 352 (Ont. Gen. Div.); Bell Canada v. Olympia & York Developments Ltd. (1994), 1994 CanLII 239 (ON CA), 17 O.R. (3d) 135 (C.A.). [^7]: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 at para. 24 (C.A.); Stellarbridge Management Inc. v. Magna International (Canada) Inc., 2004 CanLII 9852 (ON CA), [2004] O.J. No. 2102 at para. 97 (C.A.); Zesta Engineering Ltd. v. Cloutier (2002), 2002 CanLII 25577 (ON CA), 21 C.C.E.L. (3d) 161 at para. 4 (Ont. C.A.); McGee v. London Life Insurance Co., [2008] O.J. No. 5312 at paras. 5-8 (S.C.J.); Caputo v. Imperial Tobacco Ltd. (2005), 2005 CanLII 63806 (ON SC), 74 O.R. (3d) 728 at paras. 23-25 (S.C.J.). Lee v. General Motors Co. of Canada, [2004] O.J. No. 2245 (S.C.J.). [^8]: Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 at para. 52 (C.A.). [^9]: Das v. George Weston Limited, 2017 ONSC 5583 at para. 65, var’d 2018 ONCA 1053. [^10]: (2009), 2009 ONCA 722, 100 O.R. (3d) 66 (C.A.).