COURT FILE NO.: CV-21-00672564-0000
DATE: 20221130
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: THE TIRE PIT INC., Appellant
AND:
AUGEND 6285 YONGE VILLAGE PROPERTIES LTD., Respondent
BEFORE: VERMETTE J.
COUNSEL: Bernard Gasee, for the Appellant
Terry Corsianos and George Corsianos, for the Respondent
HEARD: May 9, 2022
ENDORSEMENT
[1] The Appellant, The Tire Pit Inc. (“Tire Pit”), seeks leave to appeal the arbitration award of the Honourable J. Douglas Cunningham, Q.C. dated October 29, 2021 (“Award”) pursuant to subsection 45(1) of the Arbitration Act, 1991, S.O. 1991, c. 17 (“Act”). While this is not expressly stated in its Notice of Appeal/Application for Leave to Appeal, Tire Pit also appears to argue that the Award should be set aside pursuant to subsections 46(1)3 and 46(1)6 of the Act.
[2] Tire Pit’s position is without merit. Its application is dismissed.
A. FACTUAL BACKGROUND
1. The parties
[3] Tire Pit and Charles Bulmer (“Former Landlord”) entered into a lease agreement dated December 16, 2013 (“Lease”) with respect to leased premises located at 6285 Yonge Street in Toronto (“Leased Premises”). The Leased Premises were previously owned by the Former Landlord but are now owned by the Respondent, Augend 6285 Yonge Village Properties Ltd. (“Augend”). Augend became the owner of the Leased Premises and Tire Pit’s landlord on July 31, 2020.
2. May 21, 2021 Decision of this Court
[4] On May 21, 2021, I released reasons in two applications brought by Tire Pit and Augend (“2021 Applications”): Augend 6285 Yonge Village Properties Ltd. v. The Tire Pit Inc., 2021 ONSC 3728 (“May 21, 2021 Decision”). The main issue in the 2021 Applications was whether Tire Pit had validly exercised its option to extend the Lease for a further term of five years within the time limit and in the manner prescribed in the Lease. I found that Tire Pit had validly exercised its option to extend the Lease.
[5] The option to extend is set out in section 9.13 of the Lease. It reads as follows:
Section 9.13 – Option to Extend
Provided that the Tenant has been in substantial compliance with the terms and conditions of the Lease and has promptly paid all Rent due during the Term, the Tenant shall have an option to extend the Lease for a further Term of five (5) years commencing on the expiry date of the original Term; provided that written notice is given to the Landlord at least six months prior to the expiry of the Term. Such extension shall be on the terms and conditions contained in the Landlord’s then-current form of lease for the Building and otherwise on the same terms and conditions contained in this Lease, except for the Rent and there shall be no further extension option. The Tenant shall execute an extension agreement incorporating the terms and conditions of such extension, which shall be in the form of the Landlord’s then current lease for the Building.
Base Rent for the extension Term shall be the Landlord’s then-current rent for premises in the Building or, if the Landlord then has no such premises available, such Rent shall be the fair market rental for similar premises in the area of the Building at the time of the extension, but in no event shall the Base Rent be less than the Base Rent payable during the last year of the Term. If the parties are unable to agree on the fair market rental, if applicable, within three months prior to the commencement of the extension Term, the matter shall be referred to arbitration in accordance with the Arbitrations Act, 1991 (Ontario). [Emphasis added.]
[6] The May 21, 2021 Decision includes the following paragraphs:
[51] Thus, I find that Tire Pit has validly exercised its option to extend the Lease for a five-year period starting January 1, 2020. The fact that no extension or renewal agreement was signed does not change the fact that Tire Pit validly exercised its option to extend on June 27, 2019 and is therefore entitled to lease the Leased Premises until December 31, 2024. The evidence shows that Tire Pit repeatedly asked for a lease renewal agreement and that the reason that none was signed is entirely attributable to Mr. Bulmer.
[52] Section 9.13 of the Lease provides that the extension of the Lease shall be on the same terms and conditions as contained in the Lease, except for the rent and the removal of the extension option. Section 9.13 also addresses how the rent is to be determined, including a referral to arbitration if the parties cannot agree. If Augend and Tire Pit are unable to agree on the fair market rental for similar premises in the area of the Leased Premises at the time of the extension, they must submit to arbitration to determine the base rent.
[62] In light of the foregoing, I grant the following relief:
a. A declaration that Tire Pit has validly exercised its option to extend the Lease for a five-year period starting January 1, 2020, and as a result has a right to lease the Leased Premises for that period;
b. An order requiring Augend and Tire Pit to submit to arbitration as contemplated under the Lease to determine the base rent, unless they are able to agree within two weeks of the date of this Judgment on the fair market rental for similar premises in the area of the Leased Premises at the time of the extension;
c. An order dismissing Tire Pit’s claim for damages in its application, without prejudice to its ability to seek damages in the action in Court File No. CV-21-00654472-0000;
d. An order lifting the stay imposed by Schabas J. on February 2, 2021 on the action in Court File No. CV-21-00654472-0000; and
e. An order dismissing the balance of Augend’s application and Tire Pit’s application. [Emphasis added.]
[7] In my Endorsement as to Costs dated June 14, 2021 (2021 ONSC 4274), I noted at paragraph 7 that “[t]he order requiring Tire Pit to submit to arbitration to determine the base rent was not resisted and was arguably unnecessary as the obligation to submit to arbitration is set out in the lease.”
3. Arbitration
[8] The parties were unable to agree on the issue of rent and, as a result, they submitted the issue to arbitration.
[9] On July 15, 2021, the parties executed a document entitled “Terms of Appointment of the Honourable J. Douglas Cunningham, Q.C. as Arbitrator” (“Arbitration Agreement”). The Arbitration Agreement provides, in part:
- Agreement to Arbitrate Dispute
1.1 The Parties have agreed to appoint the Honourable J. Douglas Cunningham, Q.C. of Cunningham Dispute Resolution Services Limited to serve as Arbitrator of their dispute.
1.2 The Parties are involved in a dispute (the “Dispute”) arising out of a commercial lease (the “Lease”) for the premises located at 6285 Yonge Street, Toronto (the “Premises”). More specifically this will involve a determination of the fair market rent for the Premises commencing January 1, 2020 as per the provisions of the Lease[.] [Emphasis added.]
[10] The Arbitration Agreement also included, among other things, a timetable for the delivery of materials.
[11] The arbitration took place on October 19-20, 2021. The arbitrator released the Award on October 29, 2021. In his reasons, he discusses the parties’ submissions and evidence, including the expert evidence adduced by Augend, and then analyzes the issues. The arbitrator’s analysis reads as follows:
In the end, Vermette J, after declaring that Tire Pit had validly exercised its option to renew, finding that Bulmer’s November 28, 2019 “notice” to Tire Pit requiring vacant possession by December 31, 2019 was not a valid notice under the Lease, and concluding that agreement between Tire Pit and Goldlist was indeed a sublease, ordered the determination of base rent to arbitration. Importantly, she dismissed the balance of both applications.
Given that Tire Pit was essentially seeking a declaration that it had a binding deal with Bulmer regarding the terms of the Lease renewal and that this request was dismissed, this, in the Tribunal’s view, forecloses any argument that Bulmer and Tire Pit had made an agreement on renewal rent. Indeed, as Augend points out, this was confirmed in a letter from Bulmer’s lawyer dated July 31, 2020. If Vermette J had been persuaded such an arrangement existed, she would not have ordered the parties to submit to arbitration to have Base Rent determined.
I agree with Augend that the only issue before this Tribunal is the determination of Base Rent in accordance with section 9.13 of the Lease. It is widely accepted that base rent is net rent payable to a landlord in commercial circumstances. It is, as Augend argues, rent net of expenses in addition to which there will be, in normal circumstances, TMI [taxes, maintenance and insurance] reflecting the sharing of expenses. It is, as the Tribunal will discuss later, a realistic indicator of fair market rent and of a properties’ [sic] fair market value.
In the present case, the landlord has no “current rent for premises in the building” and accordingly, base rent must be established, according to the Lease, by examining the “fair market rental” for similar premises in the area of the building at the time of the extension, which we know was January 1, 2020.
The Tribunal has carefully considered the Colliers evidence, the only expert evidence before it. The comparables chosen by Colliers are all similar premises within walking distance of 6285. The Tribunal rejects the notion that these properties are not comparable. It wasn’t the role of Colliers to examine similar operations to Tire Pit, but rather similar premises in the area. That it did.
Of the three comparables Mr. Gamboa testified were most similar, one, 6983 Yonge Street, had a commencement date January 1, 2020. The other two, the Tribunal concludes, although commencing shortly before and shortly after the effective date, are worthwhile comparables. They all are, however, north of the subject property and closer to the important intersection of Yonge Street and Steeles Avenue.
One comparable, not included in the three the expert thought were the best, is located a few blocks south of the subject property at 6050 Yonge Street. It is the same size as the subject property and is, in fact, a property counsel for Tire Pit brought to the Tribunal’s attention.
It was leased commencing May 2019 for five years at a base rent of $45.00/square foot plus TMI. The Tribunal considers it to be a worthwhile comparable.
As to the COVID issue, while there was some discussion of this virus in early January 2020, the pandemic was not declared until March 2020 such that at the effective date, it would not have had a measurable effect on lease rates in the area.
With respect to the parking issue, it is clear to the Tribunal that on the effective date, there was extant parking for eight vehicles to the south of 6283 Yonge Street. While there is no mention of parking in the 2013 lease, clearly there was a casual arrangement between 6285 and 6283 regarding the use of parking spaces.
However, in the absence of any agreement to the contrary, the tenant at 6283 had every right to use its property as it saw fit. And it saw fit to construct a patio over the parking area to expand its capacity during COVID. The fact remains that on the effective date, these parking places did exist.
The Tribunal concludes that Bulmer, who in October 2019 entered into an agreement of purchase and sale with respect to 6283 and 6285 Yonge Street, while not wishing to renew the lease with Tire Pit, did not want to lose rent during 2020 until he was sure the transaction would close. Accordingly, he continued to accept rent from Tire Pit from January 1, 2020 on the basis of the original lease.
When the transaction closed July 31, 2020, Tire Pit continued to pay this rent to the new landlord, Augend, who has continued to accept this rental amount under protest. As earlier noted, Bulmer, on the date of closing, through his lawyer, advised counsel for Augend there never was an agreement with Tire Pit with respect to an extension of the lease.
While technically true that the Lease had not been extended, the letter, as Vermette J found was, to put it gently, inaccurate. Clearly, there had been discussions between Bulmer and Tire Pit’s owner. None of these discussions, however, the Tribunal concludes, amounted to an extension of the Lease.
In these circumstances, Tire Pit was a month-to-month tenant of Bulmer until the sale of the subject property occurred. The Tribunal accepts that over a number of years, Bulmer and the Tire pit [sic] owner developed a friendly, casual relationship.
Nevertheless, section 8.08 of the subject lease makes it abundantly clear that Bulmer’s casual acceptance of rent from Tire Pit after December 31, 2019 did not extend the term of the Lease.
Simply put, the Tribunal concludes, Bulmer wanted it both ways. He obviously was anxious to sell the buildings but until he was assured that was going to happen, he didn’t want to lose rent or risk losing a long-term tenant should the transaction not close.
Conclusion
Taking into account all of the evidence before it and the submissions of counsel, the Tribunal concludes that a fair base rent for the subject premises at 6285 Yonge Street is $50.00/square foot. The evidence of the Colliers expert witness was most helpful and as noted, the Tribunal had before it no other expert evidence. Mr. Gamboa was a credible and knowledgeable witness.
Accordingly, it is ordered that the renewal of the Lease of the subject property by Tire Pit commencing January 1, [2020][^1] will require Tire Pit to pay a base rent of $50.00/square foot. By agreement, Tire Pit will be credited for any rent it has paid since January 1, 2020.
Pursuant to section 9.13 of the subject Lease, this new Lease will be on the terms and conditions contained in the subject Lease dated December 16, 2013. There shall be no further extension option.
[12] The arbitrator did not order costs as he concluded that this was not a case where costs should be awarded.
4. Tire Pit’s Notice of Appeal
[13] Tire Pit’s Notice of Appeal has 46 pages and lists 48 grounds of appeal / alleged errors of law. The grounds are extremely repetitive. The main ones can be summarized as follows:
a. The arbitrator found that Tire Pit was a month-to-month tenant in 2020 until the sale of the property, while this Court had found that the Lease had been renewed for five years commencing January 1, 2020.
b. The arbitrator interpreted this Court’s decision as foreclosing any argument that the Former Landlord and Tire Pit had already agreed on the renewal rent while this issue was never adjudicated on the merits and was therefore not res judicata.
c. The arbitrator failed to find that Tire Pit and the Former Landlord had agreed between them on the fair market renewal base rent.
d. The arbitrator erred in relying on section 8.08 of the Lease as Tire Pit was never in default.
e. The arbitrator failed to acknowledge that, despite time being of the essence under the Lease, the arbitration was not commenced until 22 months after the Notice of Renewal was delivered while the Lease contemplates that the arbitration will take place within three months of the delivery of the Notice of Renewal. The arbitrator failed to find that the delay in bringing the arbitration for the determination of renewal base rent was unconscionable, prejudicial and unfair in the circumstances, and he failed to consider that he may have in law lost jurisdiction because of this delay.
f. The arbitrator failed to follow the directions in the renewal clause of the Lease when determining the fair market rent.
g. The arbitrator failed to recognize a number of issues with respect to Augend’s expert evidence.
h. The arbitrator failed to act fairly and to give sufficient legal effect to the word “fair” in determining fair market rent (which Tire Pit defines as rent that is just and reasonable in the circumstances).
i. The doubling of the rent by the arbitrator was unconscionable and unfair. If the renewal rent were to include additional rent as claimed by Augend, this would result in an approximate “tripling” of the rent. Such a radical increase would not be within the commercial expectations of the parties.
j. The arbitrator erred in holding that considerations postdating January 1, 2020 (such as COVID-19, parking and other issues) were irrelevant.
k. The arbitrator failed to take into consideration the negligence and breach of due diligence of the Former Landlord and the current landlord, i.e. Augend.
l. The arbitrator erred in making his award retroactive for the period between January 1, 2020 and July 1, 2020 as the Former Landlord did not participate in the arbitration.
m. The arbitrator erred in awarding rent on a “per square foot basis” when the original Lease only provides for gross rent.
n. The arbitrator’s discussion of additional rent is beyond the scope of the arbitrator’s jurisdiction as the referral from this Court only required a determination of base rent, not additional rent.
o. The arbitrator did not clearly determine whether additional rent was payable.
[14] Most of the arguments set out in Tire Pit’s Notice of Appeal and Factum were also raised before the arbitrator, including in the document entitled “The Tenant’s Amended Statement of Facts, Points at Issue, and Relief Sought by the Tenant The Tire Pit Inc.”
B. DISCUSSION
1. Applicable legal principles
a. Appeal on questions of law
[15] Subsection 45(1) of the Act provides as follows:
If the arbitration agreement does not deal with appeals on questions of law, a party may appeal an award to the court on a question of law with leave, which the court shall grant only if it is satisfied that,
(a) the importance of the matters at stake in the arbitration justifies an appeal; and
(b) determination of the question of law at issue will significantly affect the rights of the parties.
[16] In this case, the arbitration agreement executed by the parties does not deal with appeals. Therefore, leave to appeal is necessary, and leave can only be granted with respect to a question of law.
[17] Questions of law are questions about what the correct legal test is, and questions of mixed fact and law involve applying a legal standard to a set of facts: see Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 at para. 49. Legal errors include the application of an incorrect principle, the failure to consider a required element of a legal test, or the failure to consider a relevant factor: see Sattva at para. 53.
[18] Contractual interpretation involves issues of mixed fact and law as it is an exercise in which the principles of contractual interpretation are applied to the words of the written contract, considered in light of the factual matrix: see Sattva at para. 50.
[19] The Supreme Court of Canada stated the following in Sattva (at para. 51) with respect to the distinction between questions of law and questions of mixed fact and law:
[…] One central purpose of drawing a distinction between questions of law and those of mixed fact and law is to limit the intervention of appellate courts to cases where the results can be expected to have an impact beyond the parties to the particular dispute. It reflects the role of courts of appeal in ensuring the consistency of the law, rather than in providing a new forum for parties to continue their private litigation. For this reason, Southam identified the degree of generality (or “precedential value”) as the key difference between a question of law and a question of mixed fact and law.
[20] Some courts have held that the issue of whether the elements of the doctrines of issue estoppel or res judicata are met is a question of law: see, e.g., Klassen v. British Columbia (Minister of Public Safety and Solicitor General), 2021 BCCA 294 at para. 23, Spadacini-Kelava v. Kelava, 2020 ONSC 7907 at para. 123, and Evans v. Evans, 2016 ONSC 6612 at para. 39. However, other decisions cast doubt on this conclusion as a general rule: see, e.g., Victoria University (Board of Regents) v. GE Canada Real, 2016 ONCA 646 at paras. 88-89, 92-93.
b. Setting aside an arbitration award
[21] Section 46 of the Act reads, in part:
(1) On a party’s application, the court may set aside an award on any of the following ground:
The award deals with a dispute that the arbitration agreement does not cover or contains a decision on a matter that is beyond the scope of the agreement.
The applicant was not treated equally and fairly, was not given an opportunity to present a case or to respond to another party’s case, or was not given proper notice of the arbitration or of the appointment of an arbitrator.
(2) If paragraph 3 of subsection (1) applies and it is reasonable to separate the decisions on matters covered by the arbitration agreement from the impugned ones, the court shall set aside the impugned decisions and allow the others to stand.
(3) The court shall not set aside an award on grounds referred to in paragraph 3 of subsection (1) if the party has agreed to the inclusion of the dispute or matter, waived the right to object to its inclusion or agreed that the arbitral tribunal has power to decide what disputes have been referred to it.
[22] Subsections 17(3) and (5) and section 19 of the Act are related provisions. They state:
17 (3) A party who has an objection to the arbitral tribunal’s jurisdiction to conduct the arbitration shall make the objection no later than the beginning of the hearing or, if there is no hearing, no later than the first occasion on which the party submits a statement to the tribunal.
(5) A party who has an objection that the arbitral tribunal is exceeding its authority shall make the objection as soon as the matter alleged to be beyond the tribunal’s authority is raised during the arbitration.
19 (1) In an arbitration, the parties shall be treated equally and fairly.
(2) Each party shall be given an opportunity to present a case and to respond to the other parties’ cases.
[23] The court has a supervisory responsibility to ensure that all parties receive the benefit of a fair procedure. The obligation to treat parties “equally and fairly” in both ss. 19(1) and 46(1)6 of the Act incorporates the requirements of natural justice and procedural fairness. In the context of these provisions, procedural fairness generally refers to the right to be heard and the right to an independent and impartial hearing. It is important to remember that the duty of fairness is concerned with ensuring that adjudicators act fairly in the course of making decisions, not with the fairness of the actual decisions they make. See Highbury Estates Inc. v Bre-Ex Limited, 2015 ONSC 4966 at paras. 21, 24-25, Baffinland v. Tower-EBC, 2022 ONSC 1900 at para. 77, and Chadeesingh v. Flores, 2020 ONSC 5534 at para. 32.
[24] In Alectra Utilities Corporation v. Solar Power Network Inc., 2019 ONCA 254 (“Alectra”) at paras. 25-27, the Court of Appeal stated the following with respect to an application to set aside an arbitration award under subsection 46(1)3 of the Act:
[25] Although the court cannot apply s. 46(1)3 without having regard to an arbitrator’s decision, the court’s authority to set aside an arbitration award under that subsection depends on the mandate the arbitration agreement confers on the arbitrator to resolve a particular dispute. In order to succeed on an application to set aside an arbitration award, an applicant must establish either that the award deals with a dispute that the arbitration agreement does not cover or contains a decision on a matter that is beyond the scope of the arbitration agreement.
[26] For example, if an arbitration agreement provides that an arbitrator shall resolve a particular question and the arbitrator does so, the court has no authority to set aside the award on the basis that the arbitrator’s decision is unreasonable or incorrect. If, however, in the course of resolving the particular question remitted the arbitrator asks and answers an additional second question, the award may be set aside – not because the arbitrator’s answer to the second question is unreasonable or incorrect, but because the arbitrator had no authority to reach any conclusion on the second question at all.
[27] In short, s. 46(1)3 requires that arbitrators act within the bounds of the authority granted by the arbitration agreement pursuant to which they are appointed – no less, but no more. Section 46(1)3 is not an alternate appeal route and must not be treated as such. [Emphasis in the original.]
[25] According to the Court of Appeal, subsection 46(1)3 of the Act sets out a jurisdictional question that must be answered correctly, and it neither requires nor authorizes review of the substance of an arbitrator’s award: see Alectra at para. 43. Jurisdiction is determined not by asking whether the arbitrator made a correct decision, but by asking whether the arbitrator had the authority to make the inquiry that they made: see Parc-IX Limited v. The Manufacturer’s Life Insurance Company, 2021 ONSC 1252 at paras. 40-42.
[26] Consistent with subsection 17(3) of the Act, this Court has repeatedly held that a party’s failure to raise a jurisdictional objection at the outset of an arbitration precludes that party from doing so later on. See Kingston Automation Technology Inc. v. Montebello Packaging, 2021 ONSC 5924 at para. 18 and The Piazza Family Trust v. Veillette, 2011 ONSC 2820 at paras. 69-72 (Div. Ct.).
2. Application to this case
a. Grounds to set aside the Award under subsection 46(1)
[27] There is no basis to set aside the Award under subsection 46(1)6 or section 19 of the Act. The fairness arguments raised by Tire Pit all relate to the fairness of the decision, not the fairness of the process leading to the decision. There is no evidence before me that Tire Pit was not given a fair hearing. It had notice of the arbitration and was given an equal opportunity to present its case and to respond to Augend’s case.
[28] There is also no basis to set aside the Award under subsection 46(1)3. The Award deals with the dispute identified in the Arbitration Agreement, i.e. the determination of the fair market rent for the Leased Premises commencing January 1, 2020 as per the provisions of the Lease, and nothing else. Further, and in any event, Tire Pit is precluded from raising a jurisdictional issue at this stage as it failed to raise any jurisdictional objection before the arbitrator. Notably, Tire Pit did not argue before the arbitrator that he had lost jurisdiction because of the delay in bringing the arbitration.[^2]
[29] As for the issue of additional rent, as acknowledged by Tire Pit, the arbitrator did not make any order with respect to additional rent. Nor did he make any finding that additional rent was payable under the Lease. The arbitrator restricted himself to the determination of “base rent”, in accordance with section 9.13 of the Lease. The notion of “additional rent” is alluded to only once in the arbitrator’s analysis, at paragraph 34 of his decision, in the context of his discussion of the meaning of “base rent”. “Base rent” is the expression used in section 9.13 of the Lease and it was within the arbitrator’s jurisdiction to interpret it. The other mentions of additional rent in paragraphs 8, 9, 13 and 14 of the arbitrator’s decision are in the context of a summary of the parties’ positions. The issue of whether additional rent is payable under the Lease was not before the arbitrator and is not before this Court.
b. Questions of law under subsection 45(1)
[30] With the possible exception of the grounds dealing with an alleged misinterpretation of, or alleged inconsistencies with, the May 21, 2021 Decision, which are discussed below, I find that none of the grounds of appeal raised by Tire Pit are questions of law. They all raise questions of fact or questions of mixed fact and law, including issues of contractual interpretation of the Lease. Tire Pit has not identified any instances where the correct legal test was not applied by the arbitrator. Virtually all of the arguments raised on this application were raised and considered by the arbitrator.
[31] With respect to the grounds dealing with an alleged misinterpretation of, or alleged inconsistencies with, the May 21, 2021 Decision, I find it unnecessary to determine whether they raise a question of law as I conclude that they are without merit.
[32] Augend’s Notice of Application for its 2021 Application requested the following relief, among others:
additionally and/or alternatively, if the Court finds that the Tire Pit Agreement has been validly renewed, an order pursuant to section 9.13 of the Tire Pit Agreement that the matter be remitted to arbitration in order for the arbitrator to determine the new rent payable for the five-year renewal period;
[33] I note that section 9.13 of the Lease only requires that the matter be referred to arbitration in the event the parties are unable to agree on the fair market rental.
[34] Tire Pit’s Factum on the 2021 Applications contained the following two paragraphs:
Although the rent was never formally agreed to, the Tire Pit increased the rent by 2% every year as provided for in the lease, even after January 21, 2020, as was the past custom between the tenant, and the landlord and the landlord Bulmer never complained.
If the only concern of the landlord is the “quantum” of rent, the landlord can and could always have invoked the “arbitration clause” in the leased [sic] to resolve any rent quantum issue. [sic] and there is and was never any need for a Court order or an Application for this arbitration remedy. [Emphasis added.]
[35] The statement in Tire Pit’s Factum that the rent was never agreed to was consistent with the evidence given by Tire Pit’s principal during his cross-examination on his affidavit. He stated numerous times that he had never discussed rent with the Former Landlord in relation to the extension of the Lease. Further, counsel for Tire Pit acknowledged at the hearing that rent had not been discussed. It is against this backdrop that I ordered that the parties submit to arbitration to determine the base rent, unless they were able to agree within two weeks of the May 21, 2021 Decision. Such an order would have been unnecessary had an agreement already been reached on rent. The May 21, 2021 Decision does not contain any discussion of this issue because it was uncontested that rent had not been agreed to. If, despite the foregoing, Tire Pit wanted to argue that an agreement had already been reached with the Former Landlord with respect to rent and that a referral to arbitration under section 9.13 of the Lease was therefore unnecessary, its only avenue for relief was an appeal of the May 21, 2021 Decision.
[36] As for the arbitrator’s statement that “Tire Pit was a month-to-month tenant of Bulmer until the sale of the subject property occurred”, it is not inconsistent with the May 21, 2021 Decision when interpreted in context. This statement does not constitute a finding that the Lease was not extended. Among other things, the arbitrator states in his conclusion (at para. 50) that the base rent that he is ordering is with respect to the renewal of the Lease commencing January 1, 2020. Thus, it is clear that his decision is based on the premise that the Lease was renewed for five years commencing on January 1, 2020. In my view, the arbitrator used the expression “month-to-month tenant” as a shorthand to describe the uncertain situation in which Tire Pit was in the first half of 2020, i.e. before the May 21, 2021 Decision. At that time, the Former Landlord continued to accept rent payments from Tire Pit while refusing to sign a lease renewal agreement and taking the position on and off that the Lease had not been renewed. Further, and in any event, the arbitrator’s statement that Tire Pit was a month-to-month tenant did not play any role in his analysis supporting his conclusion regarding the amount of base rent.
[37] In conclusion, I find that none of the issues raised by Tire Pit (including the issues related to alleged inconsistencies with the May 21, 2021 Decision) would have an impact beyond the parties to this particular dispute. Nor do they have the degree of generality or precedential value that is generally expected of questions of law. Granting leave to appeal in this case would not contribute to ensure the consistency of the law, but, rather, would only provide a new forum for the parties to continue their private litigation: see Sattva at para. 51. Given that Tire Pit has failed to show that its appeal would relate to questions of law, leave to appeal is not granted. If the grounds related to an alleged misinterpretation of, or alleged inconsistencies with, the May 21, 2021 Decision raise a question of law, the appeal is dismissed with respect to these grounds for the reasons set out above.[^3]
C. COSTS
[38] Augend was the successful party on this application and is entitled to its costs. There is no reason in this case to depart from the principle that costs are ordinarily awarded to the successful party.
[39] As has been observed in many cases, costs on an elevated scale are exceptional and are reserved for those situations when a party has displayed reprehensible, scandalous or outrageous conduct: see Quickie Convenience Stores Corp. v. Parkland Fuel Corporation, 2021 ONCA 287 at para. 4. It is my view that Tire Pit’s conduct in this case does not rise to the egregious level required to award costs on a substantial indemnity basis.
[40] As for quantum, Tire Pit’s bill of costs is in the amount of $38,904.77 (on a partial indemnity basis), and Augend’s costs outline is in the amount of $15,239.18 (on a partial indemnity basis). In these circumstances, there can be no question that the amount of costs sought by Augend would have been within Tire Pit’s reasonable contemplation. I have reviewed Augend’s costs outline and I am generally satisfied that the time spent, the lawyers’ rates and the costs sought are fair and reasonable. However, I will apply a small reduction to the amount sought to take into account potential duplication of work between the timekeepers involved, two senior lawyers.
[41] Taking the foregoing into account, as well as the factors set out in Rule 57.01(1) of the Rules of Civil Procedure and the reasonable expectations of the parties, I find that the fair and reasonable award of costs in favour of Augend for the application are on a partial indemnity basis in the all-inclusive amount of $13,000.00. In my view, this is an amount that Tire Pit should reasonably have expected to pay in the event that it was unsuccessful on the application. The costs are to be paid by Tire Pit to Augend within 30 days.
D. CONCLUSION
[42] Tire Pit’s appeal/application is dismissed. Tire Pit is ordered to pay costs in the amount of $13,000.00 to Augend within 30 days.
Vermette J.
Date: November 30, 2022
[^1]: The original version of the Award includes the year 2021, but this was corrected by the arbitrator by e-mail dated October 30, 2021. [^2]: In any event, it is my view that this argument is without merit since I ordered the parties on May 21, 2021 to submit to arbitration with respect to the determination of the base rent. [^3]: Because I conclude that any appeal would be dismissed, it is unnecessary to discuss the leave criteria.