Court File and Parties

COURT FILE NO.: CV-20-650979 MOTION HEARD: 2020-12-17 REASONS RELEASED: 2021-01-02 COSTS SUBMISSIONS: In Writing COSTS ENDORSEMENT RELEASED: 2022-03-28

SUPERIOR COURT OF JUSTICE – ONTARIO

BETWEEN:

PAUWA NORTH AMERICA DEVELOPMENT GROUP CO. LTD. and NORTHERN CC GROUP INC. Plaintiffs

- and-

SKYLINE PORT MCNICOLL (DEVELOPMENT) INC. Defendant

BEFORE: ASSOCIATE JUSTICE McGRAW

COUNSEL: Dr. Ran He E-mail: rhe@thellp.com -for the Plaintiffs

R. Winterstein E-mail: rwinterstein@grllp.com -for the Defendant

COSTS ENDORSEMENT RELEASED: March 28, 2022

Costs Endorsement

[1] The Plaintiffs brought a motion for leave to issue a Certificate of Pending Litigation (“CPL”) resulting from an unsuccessful transaction with the Defendant for the purchase of over 800 acres of property located on and around Georgian Bay (the “Lands”) under power of sale. The Defendant subsequently entered into an agreement to sell the Lands to a third party purchaser (the “Third Party Sale”) with a due diligence condition date of December 28, 2020.

[2] The Plaintiffs initially sought the CPL on an urgent ex parte in writing motion brought on November 10, 2020. I declined to grant the CPL and set out various options for next steps. The Plaintiffs elected to schedule a telephone case conference without Defendant’s counsel on November 13, 2020. I again declined to grant the CPL holding that there was insufficient evidence of urgency and that it would be inappropriate in the circumstances to grant the CPL in the context of a significant commercial real estate transaction without providing the Defendant with an opportunity to make submissions. Another telephone case conference was held on November 17, 2020 with the participation of Defendant’s counsel where the motion was scheduled and an expedited timetable was ordered.

[3] The motion was heard in open court on December 17, 2020. By Interim Endorsement dated December 24, 2020 and Reasons For Endorsement dated January 2, 2021, I dismissed the motion (Pauwa North America Development Group Co. Ltd. v. Skyline Port McNicoll (Development) Inc., 2021 ONSC 18)(the “Reasons”). The parties were invited to make written costs submissions if they could not agree.

[4] The Defendant seeks costs of the motion of $33,803.39 on a partial indemnity scale. The Plaintiffs submit that there should be no costs or alternatively, that any costs awarded to the Defendant should be no more than $15,000.

[5] Subject to the provisions of an Act or the Rules, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent costs shall be paid (s. 131(1), Courts of Justice Act (Ontario)). In exercising its discretion, in addition to the result and any offer to settle made in writing, the court may consider the factors set out in Rule 57.01(1).

[6] The overriding principles in determining costs are fairness and reasonableness (Boucher v. Public Accountants Council for the Province of Ontario, (2004), 71 O.R. (3d) 291 (C.A.)). The general rule is that costs on a partial indemnity scale should follow the event except for very good reasons such as misconduct, miscarriage in procedure or oppressive or vexatious conduct (1318706 Ontario Ltd. v. Niagara (Regional Municipality) (2005), 75 O.R. (3d) 405 (C.A.)).

[7] In my view, there is no reason to depart from the general principle that the Defendant is entitled to costs reflective of its success. In assessing the Defendant’s success and determining the appropriate quantum, I have taken into consideration that the Defendant did not discharge its onus to demonstrate that there is no triable issue with respect to whether the Plaintiffs had a reasonable claim to an interest in the Lands. On this point, the Plaintiffs were successful.

[8] However, as set out in the Reasons, I concluded that on balance it was not just and equitable to grant the CPL. While I held that the Lands are unique, I found that they were being acquired as an investment by one recently incorporated Plaintiff with the rights to be assigned to the other Plaintiff and the purchase price paid by another related company. More importantly, I concluded that the primary factors against granting the CPL were the balance of convenience and the relative harm given the risk that the Third Party Sale would not close. I also concluded that a CPL would effectively act as injunctive relief as it would remain on title possibly deterring other potential purchasers and further delaying the sale of the Lands indefinitely. Further, the Plaintiffs were not without remedy as they could still advance their damages claim.

[9] The Plaintiffs submit that no costs should be awarded because the Third Party Sale did not close. The Plaintiffs argue that it would not be equitable to award costs when the main reason for the Defendant’s success did not happen. I disagree. At the time the Plaintiffs brought and argued their urgent motion, it was on the basis that the Third Party Sale was proceeding. There was no evidence to the contrary. In my view, it would not be fair or appropriate to consider circumstances which did not exist at the time the motion was disposed of for the purpose of determining costs. Further, as set out in the Reasons, I declined to grant the CPL in part given that it would remain on title and operate like an injunction deterring other potential purchasers which might impede the Defendant’s long-standing efforts to sell the Lands in the winter during a pandemic.

[10] The Plaintiffs’ delay also added unnecessary time and cost to the motion (Rules 57.01(1)(e)(f)). The Plaintiffs did not bring the motion until November 10, 2020, almost 3 months after the Plaintiffs’ deal did not close and the Defendant advised them that there was another potential purchaser. In the interim, to mitigate its losses and continue its efforts to sell the Lands, the Defendant pursued the Third Party Sale. This resulted in the motion proceeding on an urgent basis with an expedited timetable which in turn required greater time and effort by the parties. This was particularly pronounced in the context of significant commercial land transactions of $30 million-$40 million between sophisticated parties where the facts and disputed issues were more complex.

[11] In all of the circumstances, and having reviewed the Defendant’s Bill of Costs, I am satisfied that it is fair and reasonable and within the reasonable expectations of the parties for the Plaintiffs to pay costs to the Defendant fixed in the amount of $24,000 within 30 days.

Released: March 28, 2022

Associate Justice McGraw