RULING ON COSTS

Introduction

COURT FILE NO.: CV-22-89534
DATE: 2025/04/25
ONTARIO
SUPERIOR COURT OF JUSTICE

B E T W E E N:
Rothmar Holdings Inc. (Applicant)
– and –
The City of Cornwall and the Chief Building Official of the Corporation of the City of Cornwall (Respondents)

Peter J. Henein, Counsel for the Applicant
Roberto Ghignone and Ricksen Tam, Counsel for the Respondents
Heard: March 19-21 and April 15-16, 2024

CORTHORN, J.

[2] Rothmar commenced an appeal from the four denials. Rothmar did so by issuing a separate notice of application for each denial. In this ruling, to distinguish between the applications for a building permit and the applications before this court I refer to the latter as “the appeals”. For ease of reference, the respondents on the appeals are referred to collectively as “the City”.

[3] Rothmar brings the appeals pursuant to s. 25 of the [Building Code Act, 1992, S.O. 1992, c. 23](https://www.ontario.ca/laws/statute/92b23) (“the Act”). That section allows a person “who considers themselves aggrieved by an order or decision made by the chief building official, a registered code agency or an inspector under this Act” to appeal the decision or order to this court.

[4] The appeals were scheduled to be heard for three days, commencing on March 19, 2024.

[5] In December 2023, following a pre-trial conference, the City issued building permits for two of the properties. On the morning of March 19, 2024, prior to the opening of court, the City informed Rothmar that a building permit for a third property would issue. In addition, the parties anticipated that the City would, later the same day, respond regarding the fourth building permit. By mid-day on March 19, 2024, the City informed Rothmar that a building permit would issue for the fourth property.

[6] With a building permit issued for each of the four properties, the parties did not require a determination of substantive issues raised on the appeals or in the City’s responses to them. During the three days originally scheduled for the hearing of the appeals, and on two additional days in April 2024, the parties instead made submissions on costs. In their respective submissions, the parties addressed costs of the appeals and of a preliminary evidentiary motion heard and determined in early 2024: [Rothmar Holdings Inc. v. The City of Cornwall, 2024 ONSC 1107](https://www.canlii.org/en/on/onsc/doc/2024/2024onsc1107/2024onsc1107.html).

[7] Rothmar’s position is that it is entitled to its costs, on the substantial indemnity scale, of the appeals and the motion. Rothmar asks the court to fix its costs in the total amount of $717,525.96. That amount is broken down, in a single bill of costs, as follows:

Fees: $614,210.71
HST on fees: $79,847.39
Disbursements: $20,768.02
HST on disbursements: $2,699.84
Total: $717,525.96

[8] In its bill of costs, Rothmar also addresses costs on a per appeal basis. Rothmar does so by dividing the fees (for the motion and the appeals, combined) and the disbursements, by four. On a per appeal basis, Rothmar’s costs are $173,514.52 (fees, disbursements, and HST).

[9] The City seeks its costs, on the partial indemnity scale, of the motion and the appeals. In the alternative, the City (a) seeks its costs, on the partial indemnity scale, of the motion, and (b) asks the court to award no costs of the appeals.

[10] In total, the costs on the partial indemnity scale, which the City seeks, are $193,057.59. That amount is broken down, in two costs outlines, as follows:

Motion

Fees: $10,232.89
HST on fees: $1,330.28
Disbursements (incl. HST): $98.08
Sub-total: $11,661.25

Appeals

Fees: $154,406.32
HST on fees: $20,072.82
Disbursements (incl. HST): $6,917.20
Sub-total: $181,396.34

[11] The City also addresses the costs of the appeals on a per appeal basis. Excluding costs of the motion, the City identifies costs on a per appeal basis in the amount of $45,350 ($181,396.34/4).

[12] The difference between the costs requested by Rothmar and those requested by the City is striking. The former equal approximately four times the latter—without accounting for the different scales on which the parties base their respective calculations of costs.

[13] Rothmar asks the court to consider the City’s conduct prior to the permit applications, throughout the permit application process for each of the four properties, and in the context of the appeals. Rothmar submits that the City adopted a “bob and weave” approach throughout the application and appeals process—changing their position from one moment to the next.

[14] Rothmar submits that the City’s conduct during the applications and appeals process was, at least in part, in response to the City’s lack of success, in late 2021, in its attempts to acquire title to an unrelated property. The unrelated property was owned by a company in which Rothmar’s principal is involved.

[15] Rothmar asks the court to conclude that the City’s conduct constitutes bad faith and supports an award of costs on the substantial indemnity scale.

[16] The City takes a narrower view of the appeal proceedings. The City’s position is that the appeals are based in statute (i.e., s. 25 of the Act). The City submits that a statutory appeal process is not a “gateway” for the court to become involved in the entire building permit application process.

[17] The City describes the steps taken by Rothmar—specifically the timing of each appeal—as unusual. The City’s position is that, had Rothmar provided the information the City required to fully consider the proposed development of each property, building permits would, as they did, have issued over time; the appeals were unnecessary.

Disposition

[18] The court’s discretion to determine the issue of costs in a proceeding is found in s. 131 of the [Courts of Justice Act, R.S.O. 1990, c. C.43](https://www.ontario.ca/laws/statute/90c43) (“CJA”), and is therein prescribed as follows:

“Subject to the provisions of an Act or rules of court, 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 the costs shall be paid.”
The language of s. 131 is permissive (“may determine”); the court is not mandated to determine costs of or incidental to every proceeding or to every step in a proceeding.

[19] In summary, for the following reasons, in exercising my discretion pursuant to s. 131 of the CJA, I decline to make an order as to the costs of the appeals and of the motion:

a) Investigation of the merits of the applications would be inappropriate;
b) In the absence of findings of fact on the substantive issues, the court is unable to apply the costs factors listed in r. 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194; and
c) It is not possible to determine the relative success of the parties.

[20] Before addressing each of those reasons, I will first review the statutory framework for building permit applications and appeals to this court; that review is followed by an overview of the legal principles applicable to such appeals.

Statutory Framework and General Principles

[21] The Court of Appeal for Ontario describes the Act as providing “a set of uniform construction standards that municipalities [are] required to enforce but [cannot] vary”: [Breen v. Lake of Bays (Township), 2022 ONCA 626, para. 25](/on/onca/2022/626#par25). The Court of Appeal describes the resulting regulatory regime as being composed of three elements: (i) Plans Review; (ii) Permit Issuance; and (iii) Inspection. The appeals before this court were concerned only with the element of Permit Issuance.

[22] Applications for building permits are addressed in s. 8 of the Act. Pursuant to s. 8(1), “No person shall construct or demolish a building or cause a building to be constructed or demolished unless a permit has been issued therefor by the chief building official.”

[23] A chief building official is mandated to issue a permit unless one or more of the reasons for refusal listed in ss. 8(2)(a)-(f) are present. When a chief building official refuses to issue a permit, they are required to provide reasons for the refusal within the period prescribed by regulation: s. 8(2.3). Under limited circumstances, a chief building official may issue a conditional permit or revoke a previously issued permit: ss. 8(3) and (10), respectively.

[24] Appeals to this court from an order or decision made by a chief building officer under the Act are governed by s. 25. The right of appeal is set out, as follows, in s. 25(1):

“A person who considers themselves aggrieved by an order or decision made by the chief building official, a registered code agency or an inspector under this Act (except a decision under subsection 8 (3) not to issue a conditional permit) may appeal the order or decision to the Superior Court of Justice within 20 days after the order or decision is made.”

[25] The powers of a judge of this court, on an appeal pursuant to s. 25(1), are prescribed in s. 25(4):

“On an appeal, a judge may affirm or rescind the order or decision and take any other action that the judge considers the chief building official, registered code agency or inspector ought to take in accordance with this Act and the regulations and, for those purposes, the judge may substitute his or her opinion for that of the official, agency, or inspector.”

[26] The general principles applicable to appeals pursuant to s. 25(1) of the Act are summarized by Barnes J. in [Elbasiouni v. The City of Brampton, 2013 ONSC 5261](https://www.canlii.org/en/on/onsc/doc/2013/2013onsc5261/2013onsc5261.html), at paras. 25 (a)-(i). From that summary, I highlight the following principles:

The power of the reviewing judge is limited to the power that the chief building officer possesses under the Act (para. 24(a));
The reviewing judge must only consider what the “Chief Building Official ought to have done at the time the application was submitted” (para. 24(d), citing Woodglen & Co. Ltd. and City of North York et al. (1984), 47. O.R. (2d) 614, with emphasis in the original); and
In some circumstances, the reviewing judge is entitled to consider fresh evidence—meaning evidence not available at the time the decision under appeal was made (para. 24(h)).

[27] It is important, for the purpose of an appeal, to identify the decision made by a chief building officer that is under appeal. It is important to do so because the appellant’s rights are determined by the reviewing judge “on the basis of the decision that the [reviewing judge] determines that the Chief Building Officer ought to have made with respect to the issuance of the requested [building permit] at the time the appellant” applied for the permit: [Sterling Studio Lofts Inc. v. Ann Borooah, 2011 ONSC 143, para. 20](https://www.canlii.org/en/on/onsc/doc/2011/2011onsc143/2011onsc143.html#par20).

[28] Put another way, the appellant’s rights crystallize on the date on which the appellant submits their building permit application: Frontenac-Lennox and Addington County Roman Catholic Separate School Board v. Kingston (City), [1994] O.J. No. 3046, 25 M.P.L.R. (2d) 103, (Ont. Ct., Gen. Div.), at para. 4.

[29] It is uncontroverted that a reviewing judge does not have the power to award damages. A request for damages must be pursued in an action separate from an appeal pursuant to s. 25(4) of the Act: [Elbasiouni, 2013 ONSC 5261, paras. 55-56](https://www.canlii.org/en/on/onsc/doc/2013/2013onsc5261/2013onsc5261.html). During the costs submissions before this court, the parties disclosed that Rothmar has commenced an action against the City in which Rothmar is pursuing claims for damages (including in relation to the building permit applications).

The Building Permit Applications and the Appeals

[30] Rothmar has been purchasing and developing both residential and commercial properties in Cornwall, Ontario since 2015. As of late 2021, when Rothmar submitted the first of the four building permit applications, it was an experienced developer.

a) 100 Pitt Street

Apr. 14, 2022 - Rothmar submits the first of two building permit applications for this property.
May 24, 2022 - The City sends Rothmar a letter refusing the permit. The City provides six reasons for the refusal.
Jun. 7, 2022 - The notice of application, for the purpose of Rothmar’s appeal from the above-noted refusal, is issued.
Aug. 16, 2022 - Rothmar submits a second building permit application for this property.
Sept. 15, 2022 - The City issues the second of the two building permits for which Rothmar applied.
Sept. 23, 2022 - The second building permit is revoked.
Oct. 20, 2022 - The second building permit is re-issued.
Mar. 19, 2024 - At 9:45 a.m., the City informs Rothmar that a building permit will issue.

b) 107 Pitt Street

May 19, 2022 - Rothmar submits a building permit application for this property.
Jun. 10, 2022 - The City sends Rothmar a letter refusing the permit. The City provides four reasons for the refusal.
Jun. 20, 2022 - A notice of application, for the purpose of Rothmar’s appeal from the refusal to issue the requested building permit, is issued.
Mar. 19, 2024 - Prior to the commencement of the hearing, the City informs Rothmar to expect the City’s response that morning. At approximately noon, the City informs Rothmar that a building permit will issue.

c) 26 First Street

Dec. 23, 2021 - Rothmar submits a building permit application for this property.
Jan. 21, 2022 - The City refuses the permit.
Feb. 9, 2023 - A notice of application, for the purpose of Rothmar’s appeal from the refusal to issue the requested building permit, is issued.
Dec. 11, 2023 - The City issues a building permit, conditional on Rothmar ensuring sufficiency of water service.

d) 155 Pitt Street

May 3, 2022 - Rothmar submits a building permit application for this property.
May 31, 2022 - The City refuses the permit.
Jun. 15, 2022 - A notice of application, for the purpose of Rothmar’s appeal from the refusal to issue the requested building permit, is issued.
Dec. 11, 2023 - The City issues a building permit.

[32] The summary timelines do not include the many steps taken by Rothmar, after the City refused to issue each of the four building permits for which Rothmar applied. Those steps include meetings between Rothmar’s representatives and the City’s building officials; email and other communication between the parties’ representatives; and Rothmar’s submission of additional documents before a building permit for each property was ultimately issued.

[33] Both in the timeline summaries and the preceding paragraph, I refer to ‘a’ building permit issued for each property. I do so because, for each property, the building permit issued is not identical to ‘the’ specific building permit for which Rothmar applied.

Investigation of the Merits of the Appeals Would be Inappropriate

[34] It has been more than a century since the decision in McLellan v. Powassan Lumber Co., [1914] O.J. No. 381, 26 O.W.R. 323 (H.C.) was released. At para. 8 of the decision, Middleton J. says the following:

“Costs are in truth incident to a determination of the rights of the parties and ought not to be made themselves the subject matter of the litigation. When the merits for any reason cannot be determined, there ought not to be a pretended investigation of the merits for the purpose of awarding costs.”

[35] The above-quoted passage continues to be followed by this court and by the Court of Appeal for Ontario. See, for example, the decisions of:

a) Mew J. in Packard v. Fitzgibbon, 2017 ONSC 566, para. 34;
b) Broad J. in Waterloo North Condominium No. 161 v. Redmond, 2017 ONSC 1304, para. 31; and
c) the Court of Appeal for Ontario in Bondy-Rafael v. Potrebic, 2019 ONCA 1026, para. 43, wherein the above-quoted passage is cited favourably.

[37] The fact that one or both of the parties may not, for the purpose of costs, consider the issuance of a building permit as a deemed settlement of Rothmar’s application for a building permit, does not preclude the court from drawing an analogy between a settlement prior to trial and the issuance of the permits in the circumstances on the appeals. I draw such an analogy; I do so based on the choices Rothmar made following each of the City’s refusals to issue the building permit requested.

[38] As an experienced developer, Rothmar made a conscious decision as to how it would respond to each of the City’s refusals to issue the building permits for which applications were made. The approach Rothmar chose includes pursuing an appeal while continuing to communicate and deal with the City in an effort to obtain ‘a’ building permit. Without making any finding, I note that the City asserts that Rothmar’s approach was “unusual”.

[39] Based on the case authorities upon which one or both of the parties rely in support of their respective costs submissions, there were at least two alternative approaches Rothmar could have taken. For example, Rothmar could, following discussion and communication with the City, have formally submitted a revised application for a building permit. It is not unusual for a chief building officer to make more than a single decision in relation to the subject property: see, for example, [Wheeler v. Syrowik, 2017 ONSC 2901](https://www.canlii.org/en/on/onscdc/doc/2017/2017onsc2901/2017onsc2901.html).

[40] Any subsequent building application Rothmar submitted would have required the City to make a decision. Rothmar would have been entitled to appeal from that decision if, in the words of s. 25(1) of the Act, Rothmar considered itself aggrieved by the decision. The twenty-day period within which to commence an appeal would have run from the date of the subsequent decision and not from the date of the City’s refusal to issue the building permit for which Rothmar originally applied.

[42] The reasons Rothmar chose the approach it did may be reflected in the two primary arguments upon which Rothmar intended to rely in support of its position on the substantive issues raised on the appeals. At the outset of its costs submissions, Rothmar summarized those two arguments as follows.

[43] First, the review by the City of the building permit applications lacked procedural fairness. Rothmar’s position is that the City’s building officials exhibited a pattern of arbitrary, unreasonable, and capricious conduct. Second, the City’s building officials erred in their interpretation of the Act and the regulations thereunder.

[44] Based on those two primary arguments, upon which Rothmar also relies for the purpose of costs, Rothmar asks the court to consider the City’s conduct through the lens of bad faith. To make the requested findings would require the court to engage in “a pretended investigation of the merits for the purpose of awarding costs” (see, McLellan, at para. 8). I make no findings in that regard; it would be inappropriate for the court to do so.

The Court is Unable to Apply Costs Factors (r. 57.07(1))

[45] What were the motivating factors behind Rothmar’s decision to approach the applications and appeals processes as it did? Any one or more possible motivating factors may have contributed to Rothmar’s decision. The reasonableness or unreasonableness of Rothmar’s approach may depend on a myriad of factors.

[46] In [Dhillon v. Dhillon, para. 20](https://www.canlii.org/en/on/onsc/doc/2009/2009canlii58607/2009canlii58607.html#par20), Mackenzie J. concludes that, “[in] the absence of judicial fact-finding, unknown motivating factors cannot be relied on by the court for the purpose of applying the factors in [r.] 57.07(1) costs questions.” In Dhillon, litigants in a family law proceeding resolved all issues, through negotiated minutes of settlement, prior to trial. Justice MacKenzie declined to make any award of costs. At para. 21, Mackenzie J. concludes that “it would be inappropriate to apply those [r.] 57.07(1) factors in determining entitlement to, let alone quantification of, a costs award on the basis of facts assumed and not arising from the judicial fact-finding process.”

[47] A settlement reached prior to trial is analogous to the issuance of building permits in the circumstances on the appeals because, in both scenarios, the court is in a similar position when asked to determine costs of the proceeding. With a settlement prior to trial, there is no evidence before the court on the substantive issues that were in dispute. In the circumstances of the appeals, although there is an evidentiary record before the court it would, for the purpose of costs, be inappropriate for the court to embark on a review of the record for a pretended investigation of the merits.

[48] In the absence of findings of fact, the court is not in a position to apply the costs factors listed in r. 57.07(1) of the [Rules of Civil Procedure, R.R.O. 1990, Reg. 194](https://www.ontario.ca/laws/regulation/900194). The court’s inability to apply those factors is another reason that, in exercising the court’s discretion pursuant to s. 131 of the CJA, I decline to make an award of costs.

The Court is Unable to Determine the Relative Success of the Parties

[49] A second century-old decision is relevant to the outcome in the matter before this court. In Titterington v. Bank of Hamilton, 1907 CarswellOnt 555, 9 O.W.R. 399, Master Cartwright concludes that no costs should be ordered where it is impossible to say whether the plaintiffs were successful or not in their action. In [Anishinaabe Child & Family Services Inc. v. Canadian Broadcasting Corp., para. 27](https://www.canlii.org/en/mb/mbqb/doc/1997/1997canlii22764/1997canlii22764.html#par27), Oliphant J. observes that this principle “appears to have stood the test of time.” The decisions in Titterington and Anishinaabe Child & Family Services are both cited favourably in Waterloo North Condominium Corporation No. 161, at para. 27.

[50] The parties before this court each delivered an expert’s report addressing the merits of the City’s refusals to issue the four building permits for which Rothmar applied. The parties did not, however, file any affidavit evidence, from an expert or from the parties’ representatives, comparing, on a property-by-property basis, the building permit for which Rothmar applied to the building permit which the City ultimately issued.

[51] In the absence of evidence of that kind, the court is not in a position to determine the relative success of the parties regarding the specific decisions under appeal. Do the terms of the building permit issued resemble the terms of the building permit for which Rothmar applied? Do the terms of the building permit issued reflect the City’s reasons for refusing the application? Alternatively, do the terms of the building permit issued reflect equal success for both Rothmar and the City?

[52] The lack of evidence as to the relative success of the parties is another factor contributing to my decision to exercise the court’s discretion, pursuant to s. 131 of the CJA, by declining to make an order as to costs of the appeals.

[53] Before concluding this ruling, I wish to comment on the record before the court.

The Record on the Appeals

[54] The parties filed a joint record; it includes the four notices of application, more than 25 affidavits (with exhibits), and all cross-examination transcripts. The ten-volume application record exceeds 4,100 pages.

[55] Some affidavits relate to the four building permit applications generally; other affidavits are specific to one or more of the four applications. There are two affidavits from expert witnesses. Both Rothmar and the City retained an expert witness to provide opinion evidence regarding the City’s reasons for refusing to issue each of the four building permits.

[56] The affidavits in support of or response to the appeals are from thirteen affiants (including the two expert witnesses); nine affiants were cross-examined. The record is fulsome, with much of the evidence tested on cross-examination.

[57] Regardless of the fulsome nature of the record, the affidavit evidence and the cross-examinations address the substantive issues raised on the appeals. The affidavits were not prepared, and the cross-examinations were not conducted, through a lens focused exclusively on the issue of costs (if focused at all on the issue of costs).

[58] As stated by Middleton J. at para. 8 of McLellan, costs are incident to the determination of substantive issues “and ought not to be made themselves the subject of litigation”. As such, the manner in which the court addresses costs should reflect their secondary importance in the litigation process.

The Motion

[60] Last, I deal with the costs of the preliminary evidentiary motion.

[62] Rothmar did not dispute Mr. Moore’s qualifications as a subject expert. Rothmar asserted that, because of the historical relationship between the City and the consulting company of which Mr. Moore is the president, he is neither impartial nor independent. Rothmar was unsuccessful on their motion for (a) a determination that Mr. Moore is neither impartial or independent; and (b) an order striking Mr. Moore’s evidence.

[63] In isolation, as the successful party on the motion, the City is presumptively entitled to its costs of the motion. Yet, there may be factors relevant to costs of the motion that the court is unable to consider—including for reasons explained in the preceding sections of this ruling. For example, when determining the substantive issues on the appeals, the court might have made findings about the quality of Mr. Moore’s evidence.

[64] The City’s costs of the motion are approximately six percent of the City’s total costs and one percent of the parties’ collective costs. In all the circumstances, in the exercise of the court’s discretion pursuant to s. 131 of the CJA, I decline to award the City its costs of the motion.

Conclusion

[65] In exercising the court’s discretion pursuant to s. 131 of the CJA, I decline to award costs of the motion or of the appeals.

Released: April 25, 2025

Madam Justice Sylvia Corthorn