Superior Court of Justice - Ontario

COURT FILE NO.: CV-17-581890

MOTION HEARD: 20240501

RE: Christina Yolanda Zaza and Andrew Baughn, Plaintiffs

AND:

City of Toronto and William Beasley Enterprises Limited, operating as Beasley Amusements, Defendants

BEFORE: Associate Justice Jolley

COUNSEL: Adam Lawson, counsel for the moving party defendant City of Toronto

Emma Najgoldberg, counsel for the responding party plaintiffs

Michael Orlan, counsel for the responding party defendant Beasley Enterprises

HEARD: 1 May 2024

REASONS FOR DECISION

[1] The plaintiff Zaza was injured in January 2017 while visiting Centreville. She sued the City of Toronto as owner and occupier of the property and Beasley Enterprises as the owner and operator of Centreville.

[2] The City consistently maintained that Beasley was exclusively responsible for maintaining the area where the plaintiff Zaza fell, pursuant to a licence agreement between them (the “Licence Agreement”). The Licence Agreement also contained a provision that required Beasley to indemnify and hold the City harmless in respect of any claims arising out of Beasley’s operations in the area in question.

[3] When the action was commenced in October 2017, the City requested Beasley to both assume its defence and to agree to let it out of the action. It continued to follow up on its requests through the balance of 2017 and multiple times throughout 2018. Despite the passage of almost two years, Beasley never responded, although it promised to do so. Instead, on 30 August 2019 Beasley served its defence and crossclaim, taking the position that the City was responsible for maintenance of the area in question and was, therefore, liable for the plaintiff’s injuries.

[4] After Beasley rejected the City’s request that Beasley admit responsibility for the area in question and assume the City’s defence, the City served a rule 49 offer to the plaintiffs and Beasley on 15 October 2019 offering a dismissal without costs, open for 60 days. The plaintiffs and Beasley did not respond and the City then wrote on 15 January 2020 advising that it would be seeking its costs going forward.

[5] The matter proceeded through discoveries, after which the City served a second time-limited offer to agree to a dismissal without costs. It stated in its 17 June 2021 letter that “if the offer is not accepted by all, City will seek its costs”.

[6] Beasley advised that it would not accept the offer until the City answered its four undertakings. The City noted that Beasley itself had given evidence that answered those undertakings during its own examination and that further answers were unnecessary. In any event, its offer to agree to a dismissal without costs was premised on it incurring no further expense in the action, including answering undertakings.

[7] Ultimately, the plaintiffs and Beasley settled the action with Beasley contributing the settlement funds. The City did not contribute toward the settlement and sought its costs of defending the action and the crossclaim from either or both of the plaintiffs or Beasley.

[8] The City made a number of offers to settle the issue of costs. By 2 December 2021, it had incurred more than $17,000 in legal fees, but it made an offer to settle those costs for $7,500 all inclusive, which was not accepted. It then served a last chance offer on 12 March 2022 agreeing to resolve costs upon receipt of $2,500. This offer was also rejected.

[9] As the parties could not resolve the matter entirely, the plaintiffs brought a motion on consent for leave to discontinue the action against both defendants and the court granted an order on consent discontinuing the action as well as the crossclaim of Beasley, without prejudice to the City’s right to seek costs of the action and the crossclaim.

[10] The City’s present bill of costs indicates it incurred costs of the action and this motion, inclusive of HST and disbursements, of $21,193.28 on a partial indemnity basis and $31,538.20 on a substantial indemnity basis. In light of both the terms of the Licence Agreement and its offer to agree to a dismissal without costs from the outset of the litigation, the City seeks substantial indemnity costs.

Costs against the plaintiffs

[11] While the City’s motion record sought costs against the plaintiffs and Beasley, it conceded on the motion that the primary target was Beasley. I agree. The plaintiffs advised in March 2020 that they were unable to let the City out of the action, given Beasley was contesting that it was responsible for the area in question and had, in fact, crossclaimed against the City.

[12] While the plaintiffs could have made their own determination of the legal implications of the Licence Agreement, I find that it was reasonable for them to keep both defendants in the action until the issue was clear. The plaintiffs were hardly passive in attempting to resolve this issue. In fact, they actively encouraged the defendants to sort out responsibility for the area, as there was no mystery about where the plaintiff fell.

[13] I do not find in all the circumstances that the plaintiffs should be liable to the City for costs.

Costs against Beasley

[14] “Whether [an] action is treated as dismissed for delay or discontinued, the court has complete discretion to fashion a costs award that is in the interests of justice” (per N12 Consulting Corp. v. Hulford, 2012 ONSC 7306 at paragraph [15](https://www.canlii.org/en/on/onsc/doc/2012/2012onsc7306/2012on