COURT FILE NO.: CV-21-00673994-0000
DATE: 20240502
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
CANDEAL GROUP INC.
Plaintiff
- and –
CAPSERVCO LIMITED PARTNERSHIP, BY ITS GENERAL PARTNER CAPSERVCO INC. and CUSHMAN & WAKEFIELD ULC/CUSHMAN & WAKEFIELD SRI
Defendants
Brendon Jones for the Plaintiff
Michael Beeforth and Rabita Sharfuddin for the Defendant Capservco Limited Partnership by its general partner Capservco Inc.
Gavin J. Tighe and Kevin Mooibroek for the Defendant Cushman & Wakefield ULC/Cushman & Wakefield SRI
HEARD: In writing
PERELL, J.
REASONS FOR DECISION - COSTS
[1] The Defendant, Capservco Inc., is the general partner of the Defendant, Capservco Limited, which is the management side of Grant Thornton LLP, the audit, accountancy, and consulting firm (collectively, “Grant Thornton”). In the summer of 2019, the Defendant Cushman & Wakefield ULC/Cushman & Wakefield SRI (“Cushman & Wakefield”), which is a real estate brokerage firm, was retained by Grant Thornton to sublease an office at 50 Bay Street, Toronto, Ontario. The office was in a 15-storey commercial office tower across the street from Union Station. In early 2020, after numerous visits to the premises, the Plaintiff CanDeal Group Inc., which is a financial services company, signed an agreement to sublease Grant Thornton’s premises. CanDeal took possession of the premises, and it made over a million dollars of tenant fixtures and improvements. In the fall of 2020, CanDeal’s employees began working at 50 Bay Street. On December 17, 2021, CanDeal sued Grant Thornton seeking, among other things, a declaration that Grant Thornton’s premises were subject to a latent defect in respect of train noise from trains idling at Union Station. CanDeal sought an order declaring the sublease void by reason of Grant Thornton’s concealment and misrepresentation of the noise of idling trains. Two years later in 2023, CanDeal added Cushman & Wakefield as a defendant. CanDeal alleged that Cushman & Wakefield was liable for negligence and misrepresentation. CanDeal alleged that Cushman & Wakefield and Grant Thornton had conspired to prevent CanDeal from discovering the idling train noise emanating from Union Station. Grant Thornton and Cushman & Wakefield each brought summary judgments dismissing CanDeal’s action. I granted the summary judgment motions.[^1]
[2] Grant Thornton seeks costs of $462,473.38 for the motion and the action on a substantial indemnity basis.
[3] Cushman & Wakefield seeks costs of $73,789.08 for the motion and action on a full indemnity basis. In the alternative, it seeks costs of $66,521.61 for the motion and the action on a substantial indemnity basis.
[4] CanDeal submits that the appropriate awards are: (a) $45,058.39 to Cushman & Wakefield on a partial indemnity basis; and (b) $175,649.61 to Grant Thornton on a partial indemnity basis. CanDeal arrived at this sum as being equal to 70% of the costs on a partial indemnity basis that it incurred in unsuccessfully prosecuting the motion and the action as set out in the Plaintiff’s Cost Outline that was submitted as part of its costs submissions.
[5] For the reasons that follow, I award: (a) Cushman & Wakefield costs of $66,521.61, all inclusive, on a substantial indemnity basis; and (b) Grant Thornton costs of $198,000, all inclusive on a substantial indemnity basis.
[6] It is not disputed that both Grant Thornton and Cushman & Wakeman are entitled to costs on a partial indemnity basis. The dispute between the parties is whether they are both entitled to costs on a full or on a substantial indemnity basis.
[7] Both defendants pulled out all stops to justify an entitlement to what is a punitive costs award. While some of their arguments are any or all of inaccurate, exaggerated, mistaken in law or fact, unfair, or superfluous, there is ample justification for a punitive costs award in the immediate case.
[8] CanDeal’s case was built upon the difficult law about the exceptions to caveat emptor and in order to make that case, they made seriously damning allegations against both Cushman & Wakefield and Grant Thornton. The Amended Statement of Claim alleges that Cushman & Wakefield and Grant Thornton conspired to prevent CanDeal from learning that the subject premises might be impacted by noise from idling trains. CanDeal’s case was premised on the Defendants purporting a fraud and making fraudulent misrepresentations.
[9] CanDeal accused the Defendants of fraudulent activity and had they proven those allegations – which they did not – the Defendants would have suffered grievous damage to their professional reputations. The gist of CanDeal’s case was that a national accounting firm in the business of ensuring that other businesses are honest and truthful in their business affairs was deceitful in subleasing one of its offices, and that Grant Thornton’s real estate agent would breach its professional and ethical obligations as a real estate agent to conspire to trick and to deceive CanDeal into purchasing a lease of commercial premises in downtown Toronto by hiding the noise from Canada’s busiest train station.
[10] Subject to the costs consequences provisions of the offer to settle rule, only in exceptional cases are costs awarded on a substantial indemnity scale.[^2] Costs on a substantial indemnity scale or full indemnity scale are reserved for rare and exceptional cases, where the conduct of the party against whom costs are ordered is reprehensible or where there are other special circumstances that justify costs on the higher scale.[^3] Typically, but not inexorably, an unsuccessful or abandoned attempt to prove fraud or dishonesty justifies an award of substantial indemnity costs.[^4]
[11] The case at bar is a case where CanDeal’s failure to prove fraud or dishonesty justifies an award of substantial indemnity costs.
[12] As is the case with all costs awards, where costs are awarded on a substantial indemnity basis, the quantum of costs must be reasonable. In Davies v. Clarington (Municipality),[^5] which is a leading case about costs on a substantial indemnity basis, 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."
[13] In the immediate case, Cushman & Wakefield’s claim for costs of $66,521.61, all inclusive, on a substantial indemnity basis is reasonable; but (b) Grant Thornton’s claim for costs of $462,473.38 all inclusive on a full indemnity basis is grossly unreasonable. The appropriate award is $198,000, all inclusive on a substantial indemnity basis.
[14] Order accordingly.
Perell, J.
Released: May 2, 2024
COURT FILE NO.: CV-21-00673994-0000
DATE: 20240502
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
CANDEAL GROUP INC.
Plaintiff
- and -
CAPSERVCO LIMITED PARTNERSHIP, BY ITS GENERAL PARTNER CAPSERVCO INC. and CUSHMAN & WAKEFIELD ULC/CUSHMAN & WAKEFIELD SRI
Defendants
REASONS FOR DECISION - COSTS
PERELL, J.
Released: May 2, 2024
[^1]: CanDeal Group Inc. v. Capservco Limited, 2024 ONSC 1315. [^2]: United States of America v. Yemec (2007), 2007 CanLII 65619 (ON SCDC), 85 O.R. (3d) 751 (Div. Ct.); Foulis v. Robinson, 1978 CanLII 1307 (ON CA), [1978] O.J. No. 3596, 21 O.R. (2d) 769 (C.A.). [^3]: Rudin-Brown v. Brown, 2023 ONCA 151; Lewis v. Lewis, 2019 ONCA 690; Whitfield v. Whitfield, 2016 ONCA 720; St. Elizabeth Home Society v. Hamilton (City), 2010 ONCA 280, supp. reasons 2010 ONCA 479; Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 (C.A.); McBride Metal Fabricating Corp. v. H & W Sales Co. (2002), 2002 CanLII 41899 (ON CA), 59 O.R. (3d) 97 at para. 38 (C.A.). [^4]: 2651171 Ontario Inc. v. Brey, 2022 ONCA 205 at para. 12; Lyons v. Todd, 2019 ONSC 2269; EnerWorks Inc. v. Glenbarra Energy Solutions Inc., 2016 ONSC 4291 at paras. 46–61 (Master); 1623242 Ontario Inc. v. Great Lakes Cooper Inc., 2016 ONSC 1002 (S.C.J.); De Cruz Lee v. Lee, 2015 ONSC 2012; Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303 at para. 26; Bargman v. Rooney (1998), 30 C.P.C. (4th) 259 at paras. 18-19 (Ont. Gen. Div.) [^5]: (2009), 2009 ONCA 722, 100 O.R. (3d) 66 (C.A.).