Court File and Parties

COURT FILE NO.: CV-21-00667377-00CL

DATE: 20220818

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: 2356802 ONTARIO CORP., Applicant

AND:

285 SPADINA SPV INC.

RONALD HITTI also known as RONNY HITTI

BEFORE: Kimmel J.

COUNSEL: Nicolas Canizares, for the Applicant

Adam Wygodny/Bethanic Pascutto, for the Respondent, 285 Spadina SPV Inc. (for written cost submissions only, replacing former counsel who appeared at the hearing)

Arlen Sternberg/Tosh Weyman, for Rogers Communications Inc.

Douglas Stewart/Chloe Snider, for Freedom Mobile Inc.

Ronald Hitti, self-represented

HEARD: February 17 & 18, 2022 (Written Cost Submissions dated May 24, July 11 and July 19, 2022)

COSTS ENDORSEMENT – ROOFTOP TENANTS

[1] In my decision released April 25, 2022 (2356802 Ontario Corp. v. 285 Spadina SPV Inc., 2022 ONSC 2427) (the “Lease Decision”) and a related lease application under court file number CV-21-00674331-00CL (collectively the “Lease Applications”) allowance was made for written cost submissions if an agreement could not be reached with the “Rooftop Tenants”, Rogers Communications Inc. (“Rogers”) and Freedom Mobile Inc. (“Freedom Mobile”), regarding the costs of the Rooftop Access Issue that is described and defined later in this endorsement and in the Lease Decision.

[2] Efforts were made to try to resolve these costs but they were unsuccessful.

[3] The applicant (“Landlord”) and respondent, 285 Spadina SPV Inc. (the “Tenant”) mutually agreed that the loser would pay the winner of the Lease Applications all-inclusive substantial indemnity costs fixed in the amount of $45,000, subject to apportionment at the discretion of the court. Ultimately, the court ruled in the Lease Decision that, based on the outcome of the Lease Applications, there would be no order of costs as between the Landlord and the Tenant.

[4] By way of summary, the court ruled as follows at paragraph 157(e) of the Lease Decision:

The Rooftop Access Issue: It was appropriate for this Court to consider the submissions of the Rooftop Tenants and if necessary, the Rooftop Tenants are deemed to have been granted intervenor status under r. 13. The Tenant did not have the right to prevent the Rooftop Tenants from accessing the Rooftop through the SPV Premises. The Rooftop Tenants have easements of necessity over the SPV Premises to access their equipment on the Rooftop, which means they shall have guaranteed access through the SPV Premises at all reasonable times. The easements of necessity will remain unless and until the Tenant can establish that it could build a viable external access ladder that is safe for all of the access needs of the Rooftop Tenants. In the meantime, the Rooftop Tenants are entitled to access the Rooftop through the Building, including the SPV Premises. I also order that the respondents shall not interfere with or frustrate the Rooftop Tenants’ access to the Rooftop through the SPV Premises, and the Landlord shall ensure the Rooftop Tenants have access at all times to the Rooftop.

Positions on Costs

[5] The Rooftop Tenants both seek an award of partial indemnity costs, their positions having largely prevailed in the Lease Decision.

[6] Rogers seeks its all-inclusive partial indemnity costs of $32,338. It suggests that a costs award anywhere in the range of $25,000-32,000 would be reasonable. Rogers filed Costs Submissions dated May 24, 2022 and Reply Costs Submissions dated July 19, 2022.

[7] Freedom Mobile seeks all-inclusive partial indemnity costs of $19,000, having provided a Bill of Costs certifying a higher amount of partial indemnity costs of $24,942 with its Costs Submissions dated May 24, 2022.

[8] The Rooftop Tenants seek an order for payment of costs by the Tenant. However, they leave it open to the court to order some or all of the costs to be paid by the Landlord if the court deems that to be appropriate. This is based upon the court’s observation in the Lease Decision that the Landlord’s conduct contributed to the dispute that ultimately led the Tenant to deny the Rooftop Tenants free and unrestricted access to their equipment on the roof of the SPV Premises by having agreed to inconsistent lease terms with the Tenant and the Rooftop Tenants. The Landlord did not file any cost submissions on this issue, although it had the opportunity to do so.

[9] The dispute between the Tenant and the Rooftop Tenants may have some roots in the inconsistent lease terms agreed to by the Landlord. However, the Tenant was not an innocent by-stander. As noted in paragraph 84 of the Lease Decision:

In the lead up to the commencement of these applications, the Tenant changed the locks at the SPV Premises and refused to give the Landlord a key. The Tenant also did not agree to provide unfettered access to the Rooftop for the Rooftop Tenants. Initially, the Tenant threatened not to allow the Rooftop Tenants access through the Building at all, but there was some loosening of that in the context of negotiated interim arrangements.

[10] Despite having been ordered to give the Rooftop Tenants unfettered access to the roof, the Tenant nonetheless contests the Rooftop Tenants’ entitlement to any costs because they were not parties to either of the Lease Applications, they did not seek to be added as parties or to intervene. The Tenant surmises that they were attempting to insulate themselves from having to pay costs and they should, thus, not receive any award of costs in their favour.

[11] The Tenant argues, in the alternative, that the costs claimed are excessive, disproportionate and outside of the Tenant’s reasonable expectations. Therefore, they should be reduced on a partial indemnity rate for senior counsel of $375/hour. This would translate into all-inclusive partial indemnity costs to Rogers of $20,125 and to Freedom Mobile of $16,230.

Entitlement to Costs

[12] The general rule is that costs follow the event. Successful parties are entitled to an award of their costs of a step in a proceeding: Necrovore Inc. v. Andover Land Corp., 66 C.LR. (3d) 252, at para. 23.

[13] While the Rooftop Tenants were not formally made parties to the Lease Applications, they were treated as such. They were given de facto standing to participate in the aspects of the interpretation of the SPV Lease regarding the Tenant’s obligation to allow the Rooftop Tenants access to the roof through the Tenant’s leased premises (the “Rooftop Access Issue”). The Rooftop Access Issue involved the interpretation of certain aspect of the Tenant’s “SPV Lease”, and the determination of priorities between the SPV Lease and the leases that the Landlord had previously entered into with the Rooftop Tenants. It directly impacted the Rooftop Tenants’ rights of access to the roof.

[14] The Rooftop Tenants were included in the timetabling and case conferences that preceded the hearing. They were permitted to file material that eventually led to the cross-examination of their affiants and an examination under Rule 39.03 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) of a safety manager from Rogers. It was readily apparent that certain issues raised, and relief sought, on the Lease Applications directly affected their lease interests. Their leases had been registered on title before the SPV Lease between the Landlord and the Tenant was entered into. There is no question that they were directly affected by the outcome of the Lease Decision.

[15] The Rooftop Tenants participated as if they were parties. Their standing to make submissions on the Lease Applications was addressed in the Lease Decision as follows:

[100] Although the Rooftop Tenants have not been joined as parties under r. 5 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, they could have been. Similarly, although they have not sought intervenor status under r. 13 of the Rules of Civil Procedure, they could have and would have been granted intervenor status on the Rooftop Access Issue because the relief requested by both the Landlord and the Tenant affects their rights.

[101] It is ultimately in the court’s discretion to control its process and determine who should be heard. It is a matter of form over substance to suggest that the Rooftop Tenants and/or the Landlord should have brought motions under either r. 5 or 13 for the Rooftop Tenants to be permitted to make submissions about matters that so clearly affect their rights under their leases. Furthermore, the scheduling orders in advance of the hearing of these lease applications clearly contemplated that the Rooftop Tenants would be participating.

[102] Rule 1.04 requires the court to construe the Rules in such a way as to secure the just, most expeditious, and lease expensive determination of every proceeding on its merits. It is just, most expeditious, and least expensive for all involved for the court to consider the submissions made by the Rooftop Tenants, whose interests the Landlord may also be advancing but who should have the opportunity to speak for themselves. If needed, on the court’s own initiative, I deem them to have been granted intervenor status under r. 13.

[16] The Rooftop Tenants do not accept the argument made by the Tenant that they were sheltering themselves from having to pay costs to the Tenant if they lost by not seeking to be added as parties under Rule 5 or to intervene under Rule 13.

[17] Even as non-parties, by participating in the Lease Applications the Rooftop Tenants were exposed to having to pay costs: 1318847 Ontario Ltd. v. Laval Tool & Mould Ltd., 2017 ONCA 184, 134 O.R. (3d) 641, at para. 58; Canadian Union of Postal Workers, at para. 32; and Daly v. Ontario Secondary School Teachers’ Federation, 1999 CanLII 7319 (ON CA), 124 O.A.C. 152, at para. 6.

[18] This Court has recognized that an intervener may be entitled to (or liable to pay) costs “where the intervener had a direct interest that was affected by the outcome of the proceeding” and is successful on the merits. See: Canadian Union of Postal Workers v. Her Majesty in Right of Canada, 2017 ONSC 6503, 19 C.P.C. (8th) 136, paras. 31-32. See also North American Financial Group Inc. v. Ontario Securities Commission, 2018 ONSC 1282, paras. 11-17.

[19] The claims by the Rooftop Tenants for costs can be considered based on their status as deemed intervenors.

[20] The Tenant relies upon Daly for the proposition that the general rule is that intervenors are neither awarded, nor ordered to pay costs, but when the court is inclined to deviate from the rule and do so, the following factors should be considered:

a. the nature and extent of the intervener’s interest in the issues before the Court and the outcome of the proceeding;

b. the nature and extent of the intervener’s involvement in the proceeding;

c. the intervenor’s resources;[^1]

d. the intervenor’s success on the merits;

e. whether one of the parties anticipated or provoked the intervenor’s involvement; and,

f. whether the Order granting leave to intervene addressed the possibility of a cost award.

[21] Many of these overlap with the factors that the court is directed to consider under Rule 57.01 when exercising its discretion with respect to costs awards under s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43.

[22] The Tenant opposed the Landlord’s requested relief on the Rooftop Access Issue and sought to prevent the Rooftop Tenants from accessing their rooftop equipment through the SPV building. Instead, the Tenant sought to require that the Rooftop Tenants use an unsafe and unsuitable exterior ladder; then, after conceding that the exterior access would have to be remedied at an undetermined cost, proposed restricted access terms.

[23] Ensuring continued access to the cellular network equipment at this important hub site was critical for the Rooftop Tenants. There is no question that the Rooftop Access Issue directly impacted important property interests of the Rooftop Tenants. The issue was also critical for the continued and uninterrupted operation of their wireless networks, which could have sweeping public impact. Their involvement was necessary for the proper adjudication of this issue. The determination of the Rooftop Access Issue required the interpretation of three leases and consideration of legal and equitable priorities over interests in land.

[24] The Rooftop Tenants were successful in relation to the Tenant’s positions, including the Tenant’s modified position after it conceded that the external ladder was not a reasonable means of access by the Rooftop Tenants. I find that the Rooftop Tenants are entitled to some costs since their positions prevailed on the Rooftop Access Issue, having regard to the factors under Rule 57.01 and those identified in Daly.

Quantum of Costs

[25] The Rooftop Tenants only seek partial indemnity costs. The scale of costs is not disputed.

[26] The additional factors (beyond those that overlap with the factors to be considered when determining entitlement to costs) that the court may consider under Rule 57.01 when determining the quantum of costs to award include:

(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

[27] The Tenant contends that the quantum of costs claimed by the Rooftop Tenants was outside of what it could reasonably have expected to pay if it lost on this issue, when considered in relation to the total substantial indemnity costs of $45,000 that it agreed upon with the Landlord in respect of all issues decided on the Lease Applications. Arguably, those agreed costs included the Rooftop Access Issue which the Landlord also took a position on in support of the Rooftop Tenants.

[28] If both Rogers and Freedom Mobile are awarded the partial indemnity costs they seek, the Tenant would be paying over $50,000 in partial indemnity costs to them on this one issue, whereas it says it only expected to pay $45,000 to the Landlord for all six issues decided in the Lease Applications, if it lost. One-sixth of $45,000 is $7,500.

[29] Freedom Mobile approaches the calculation differently, pointing out that the Rooftop Access Issue occupied 40% of the length of the Lease Decision. The Tenant’s Costs Outline, delivered at the time of the hearing of the Lease Applications, claimed partial indemnity costs in the all-inclusive amount of $46,822.86. Thus, the Tenant might reasonably have expected to pay costs of at least that amount if it lost, 40% of which would be about $18,700.

[30] Neither amounts are particularly meaningful, nor do they come close to approximating the actual partial indemnity costs claimed by the Rooftop Tenants. There is no formula or exact science to determining the appropriate quantum of costs to award to the Rooftop Tenants; that said, in the application the principles of proportionality and reasonable expectations the court can take into account benchmarks such as these, among other considerations.

[31] Rogers points out in its Reply Costs Submissions that the partial indemnity hourly rate that the Tenant claimed in its Costs Outline on the Lease Applications was $409.20 per hour for its counsel. Whereas the partial indemnity rates sought by Rogers are $485 for senior counsel and $325 for junior counsel. The Tenant now argues that the appropriate partial indemnity hourly rate for senior counsel should be $375, which is less than the Tenant itself claimed.

[32] The amount of costs that the Landlord and the Tenant agreed to could have been influenced by a multitude of factors and is not binding upon the Rooftop Tenants. The Rooftop Tenants were entitled to engage counsel of their choosing and both have offered to discount their claimed partial indemnity costs (Rogers from $32,338 to as low as $25,000 and Freedom Mobile from $24,942 to $19,000). Neither amounts are objectively unreasonable when the nature of the issues and the extent of the involvement of the Rooftop Tenants is considered. However, the costs awarded to the Rooftop Tenants cannot be considered entirely in a vacuum.

[33] Having regard to the various factors that the court is to consider and the submissions of the parties, and in the exercise of my discretion, I find that Rogers is entitled to its all-inclusive partial indemnity costs in respect of the Rooftop Access Issue fixed in the amount of $20,000. Freedom Mobile is entitled to its all-inclusive partial indemnity costs in respect of the Rooftop Access issue fixed in the amount of $15,000.

Apportionment of Costs

[34] Although it was the Tenant’s actions that necessitated the relief sought in respect of the Rooftop Access Issue, the Landlord did enter into lease terms with the Tenant that it could not honour based on the terms of the Landlord’s existing leases with the Rooftop Tenants. To that extent, some responsibility can be placed on the Landlord for the dispute escalating in the manner that it did. However, the Tenant’s unilateral actions were of most immediate concern in terms of the need for the Rooftop Tenants to become involved.

[35] I find the Tenant to be 75% responsible and the Landlord to be 25% responsible for the costs incurred by the Rooftop Tenants. They are each ordered to pay their respective proportion of the fixed costs of each of Rogers and Freedom Mobile on a several basis. According to my calculations:

a. Rogers’ costs of $20,000 shall be paid as follows: $15,000 by the Tenant and $5,000 by the Landlord; and

b. Freedom Mobile’s costs of $15,000 shall be paid as follows: $11,250 by the Tenant and $3,750 by the Landlord.

These costs shall be paid within 30 days of this endorsement.

[36] This endorsement and the directions and orders contained in it shall have immediate effect as a court order without the necessity of the formal issuance and entry of an order, although an order may be taken out by any participant by following the procedure under Rule 59.

Kimmel J.

Date: August 18, 2022

[^1]: Rogers points out that, in fact, the extent of the intervenor’s resources is generally irrelevant: see Canadian Union of Postal Workers. I would expect, if relevant, it would be on the question of whether the intervenor should be ordered to pay costs, and far less so on the question of whether they are entitled to costs, or the amount they should pay. I do not consider the resources of Rogers and Freedom Mobile and their ability to “absorb” the costs of having to participate in the Lease Applications to protect their interests to be a relevant consideration in this case.