Court File and Parties

Court File No.: CV-25-91817 Date: February 20, 2026 Superior Court of Justice - Ontario

Re: 1000850372 Ontario Inc. operating as Zen Lounge, Applicant

- and -

Core Urban Pipeline LP, Respondent

Before: MacNeil J.

Counsel: Daniel Waldman and Vanessa L. Ford – for the Applicant Jennifer Vrancic and R. McIlhone (Student-At-Law) – for the Respondent

Reasons for Decision on Costs

[1] This is my decision on costs respecting the application made by the applicant, 1000850372 Ontario Inc. operating as Zen Lounge ("the Tenant"), seeking, among other things, an interim and permanent injunction restraining the respondent, Core Urban Pipeline LP ("the Landlord"), from terminating its tenancy and from taking any action to exclude the Tenant from the rented unit, and an order for relief from forfeiture; and respecting the Landlord's motion for an order staying the application on the basis that the parties had agreed to resolve any disputes through mediation/arbitration.

[2] The Landlord was successful on its motion to stay the Tenant's application pending arbitration. The Tenant's request for an injunction and relief from forfeiture was dismissed, without prejudice to its ability to seek such relief again on better evidence.

[3] The parties were unable to settle the issue of costs of the application and motion. They have both made written submissions setting out their positions in respect of same.

General Principles

[4] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43 provides that an award of costs is in the discretion of the court.

[5] Rule 57.01(3) of the Rules provides that, when the court awards costs, it shall fix them in accordance with subrule (1) and the Tariffs. Tariff A establishes the fees and disbursements that are allowable under Rules 57.01 and 58.05.

[6] Rule 57.01(1) sets out factors to be considered by the court in exercising its discretion to award costs, including:

• the result in the proceeding;
• any offer to settle or to contribute made in writing;
• 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;
• 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;
• the amount claimed and the amount recovered in the proceeding;
• the complexity of the proceeding;
• the importance of the issues;
• the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
• whether any step in the proceeding was: (i) improper, vexatious or unnecessary, or (ii) taken through negligence, mistake or excessive caution;
• a party's denial of or refusal to admit anything that should have been admitted; and
• any other matter relevant to the question of costs.

[7] Rule 1.04(1.1) provides that, in applying the rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.

[8] Modern costs rules are designed to advance five main purposes: (1) to indemnify successful litigants for the cost of litigation, although not necessarily completely; (2) to facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences; (4) to discourage and sanction inappropriate behaviour by litigants; and (5) to encourage settlements: Fong v. Chan, 1999 CarswellOnt 3955, 128 O.A.C. 2 (Ont. C.A.), at para. 22; 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, at para. 10.

[9] Ultimately, in fixing costs, the primary principles remain fairness, reasonableness and proportionality.

[10] As stated by the Ontario Court of Appeal in Boucher v. Public Accountants Council (Ontario) (2004), 71 O.R. (3d) 291 (Ont. C.A.), at para. 26, when fixing costs, the calculation of hours and time rates is only one factor to be taken into account. The overall objective is "to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant." (See also Zesta Engineering Ltd. v. Cloutier, 2002 CarswellOnt 4020, [2002] O.J. No. 4495 (Ont. C.A.), at para. 4.)

Position of the Landlord

[11] As the successful party, the Landlord seeks its partial indemnity costs of the application and motion in the total amount of $20,183.47, representing fees of $17,815.00 plus HST of $2,315.95 plus disbursements of $52.52.

[12] The Landlord submits that it was wholly successful on its motion to stay the application and the Tenant's request for relief from forfeiture was dismissed.

[13] The application was brought by the Tenant on an urgent basis and the Landlord had less than two days to respond. The hearing date was also scheduled in short order.

[14] The Tenant sought injunctive relief which is an extraordinary remedy. The jurisprudence reflects that there are cost consequences to bringing an unsuccessful request for an injunction. The Tenant knew that the Lease was subject to a broad arbitration agreement but chose to proceed with the application which resulted in unnecessary expense and inconvenience to the Landlord. The Tenant also failed to advise the court that the relief sought was subject to an arbitration agreement.

[15] The Landlord expended more time on the application and motion than the Tenant, and it prepared a "significantly more fulsome record" to put before the court, including details which were not disclosed by the Tenant but should have been.

Position of the Tenant

[16] It is the Tenant's position that the amount of costs sought by the Landlord are excessively high and unreasonable; the amount claimed is more than three times the Tenant's legal costs at $6,521.28. The Landlord's lawyers claim over 52 hours for lawyer-client meetings, review and preparation of application and responding materials, and attendances at court, but it is difficult to reconcile this number of hours given that the Landlord responded within a 24-hour time period. Further, the Landlord is claiming the time of two partners and a senior associate which is disproportionate, unnecessary and inefficient. By contrast, the Tenant claims only 6 hours of partner time and 13.1 hours of associate time. Still further, the claimed costs amount includes time for an articling student to attend the hearing which is unjustified in the circumstances.

[17] The Tenant submits that the Landlord has applied a partial indemnity rate of 70% when the generally accepted rate is 60%.

[18] The Tenant also contends that, contrary to the Landlord's submissions, it was not barred from seeking relief from forfeiture by reason of the arbitration agreement contained within the parties' lease. This was a legitimate and live issue for the purposes of the application.

[19] It is submitted by the Tenant that the Landlord's lawyers did not do more work than the Tenant's lawyers. While the Landlord's responding affidavit was slightly longer, it contained "largely duplicative, irrelevant and unnecessary material". Further, the Landlord's factum included excerpts from the lease agreement which made it longer. The length of the Landlord's responding material "does not justify the tripling of the claimed costs". The evidence was brief, and the hearing was straightforward. There is no basis for the high costs claimed.

[20] The Tenant submits that costs should be reserved to the arbitrator as awarding costs at this stage would be unfair if the arbitrator ultimately finds that the Landlord's termination of the lease was unlawful. Alternatively, the Tenant submits that the Landlord should not be entitled to more than $6,500.00 in costs on a partial indemnity basis.

Analysis

[21] By virtue of s. 131(1) of the Courts of Justice Act, an award of costs is within the discretion of the judge. Rule 57.01 of the Rules of Civil Procedure also allows the court to take into account "any other matter relevant to the question of costs".

[22] Rule 57.03(1) provides that, on the hearing of a contested motion, unless the court is satisfied that a different order would be more just, the court shall fix the costs and order them to be paid within 30 days.

[23] Where a defendant successfully resists a plaintiff's motion for an interlocutory injunction, costs may be awarded forthwith: Quizno's Canada Restaurant Corp. v. 1450987 Ontario Corp., 2009 CarswellOnt 3512, at para. 9, citing Justice Robert J. Sharpe, in his text Injunctions and Specific Performance, at p. 2-91.

[24] With respect to the Tenant's request that costs be reserved to the arbitrator, I decline to order this for two reasons: (i) the court controls the costs of proceedings before it; and (ii) it is not clear to me that the arbitrator has the power to award such costs given the language of section 19.3(f) of the parties' lease agreement, which reads:

Section 19.3 - Arbitration

(f) The costs of the arbitration, including administrative fees, the arbitrator's fees, and reasonable attorney's fees, shall be borne by the unsuccessful Party, as determined by the arbitrator. Each Party shall bear its own costs and expenses associated with the arbitration proceedings.

[25] I am satisfied that I should exercise my discretion in a manner consistent with the normal practice relating to costs following a successful motion and award costs to the Landlord on a partial indemnity basis.

[26] While the Landlord's counsel submitted a Costs Outline, detailed dockets were not provided. As a result, the court did not have the benefit of being able to see who performed what work and the specific amount of time spent on each task by the individuals involved.

[27] I accept the Tenant's submission that it should not have to pay the costs in relation to the articling student's attendance at the hearing since the lawyer in attendance made the substantive submissions. I also accept the Tenant's submission that it appears there would have been some duplicative work done on the file given that three lawyers, ranging in experience from 13 years to 18 years, are claiming fees for attending client meetings and reviewing the application and responding materials. Accordingly, I have reduced the number of hours to be indemnified.

[28] I have also considered the following:

(a) The Landlord was wholly successful on its motion.

(b) The issues raised on the application and motion were of importance to both parties.

(c) The application was brought on an urgent basis and so the Landlord had to respond in an immediate manner.

(d) Since the Landlord's response to the application had to be prepared in a very short period of time, more than one lawyer was needed to do so.

(e) The application and motion materials were not voluminous.

(f) The Tenant could reasonably have expected to pay costs in the event of lack of success.

(g) The hourly rates claimed based on a 60% partial indemnity basis are fair and reasonable.

(h) The disbursements amount claimed is reasonable.

[29] Having regard to all of these factors, and considering the balancing exercise required under Rule 57.01 and the guidance provided by the Boucher decision of the Ontario Court of Appeal, I am satisfied that awarding costs to the Landlord in the amount of $13,500.00, inclusive of HST and disbursements, is fair, reasonable and proportionate in the circumstances.

Disposition

[30] For the foregoing reasons, this court orders that the Tenant pay costs to the Landlord fixed in the amount of $13,500.00, payable within 30 days of the release of these reasons.

MacNEIL J.

Released: February 20, 2026