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TSCC No. 1633 v. Baghai Development Limited, 2012 ONCA 417
Court of Appeal for Ontario
Docket: C52283
Heard: 03 January 2012
Justices of Appeal: Rosenberg, Simmons and Armstrong
 
On appeal from the orders of Justice Lois B. Roberts of the Superior Court of Justice, dated June 11, 2010 and May 13, 2011, and from the costs endorsements dated June 14, 2011 and June 22, 2011.
 
TSCC 1633 is a mixed use condominium located at 16-18 Harrison Garden Blvd, just south of Yonge and Sheppard in North York. The ground floor has retail/commercial units while the upper floors contain residential apartments. Rabba, a small grocery store, leases five units from Baghai Development, the developer.

Rabba no longer has any merchandise on the sidewalks at this location.

Rabba had been putting merchandise on the sidewalks in front of the store. The condo corporation complained. Agreements were made a regularly broken. The condo corporation took the landlord and tenant to court to get the merchandise off the sidewalk.
 
Baghai claimed that this was unjust as Rabba had a lease that states:
"The landlord specifically grants to the Tenant an exclusive and irrevocable licence to use the area outlined in yellow on Schedule “A” attached hereto, at no extra charge to the Tenant, for the purpose of the seasonal display of fresh produce, fresh flowers, live plants and other temporary sales kiosks in such a manner as not to impede the safe flow of pedestrian traffic around the area, and subject to compliance with all applicable laws."
 
However, the condo corporations Declaration and By-laws say different. By-law No. 1 says:
"Section 9: The sidewalks, entry, passageways, walkways and driveways used in common by the owners shall not be obstructed by any of the owners or used by them for any purpose other than for ingress and egress to and from their respective units."
 
The lower court judge ruled that the Declaration and the By-laws override the lease. The grocery store and its landlord appealed. The Appeals court upheld the decision. Pretty straight forward.
 
Lower court Costs Awarded
TSCC claimed partial indemnity costs of $172,373.01 and full indemnity costs of $199,020.97. TSCC argued that it was entitled to the higher amount by virtue of s. 134(5) of the Condominium Act, 1998, which provides:
"If a corporation obtains an award of damages or costs in an order made against an owner or occupier of a unit, the damages or costs, together with any additional actual costs to the corporation in obtaining the order, shall be added to the common expenses for the unit… ."
 
Baghai and Rabba acknowledged that, as the successful party, TSCC was entitled to an award of costs. However, they disputed TSCC 1633’s entitlement to full indemnity costs, and also argued that the amounts claimed were excessive. They suggested an award of $80,000, plus or minus disbursements, was appropriate.
 
The application judge fixed TSCC’s costs at $100,418.11, including taxes and disbursements.
 
Appeal of costs order
TSCC 1633 asked for leave to appeal the costs order. Its principal submission is that that the application judge erred by failing to order full indemnity costs, in accordance with s. 134(5) of the Condo Act.

Appeals court ruled that the application judge accepted that TSCC was entitled to full indemnity for counsel’s appearances at cross-examinations and the various court hearings.  However, she concluded that the amounts claimed for preparation and research (over 330 hours in total) were “overkill” given the relative simplicity of the legal issues, on the one hand, and the expertise of TSCC’s counsel, on the other.  She explained, at para. 22, that TSCC could have avoided much of the expenses claimed if it had tried to negotiate or arbitrate a solution, “instead of embarking on a scorched earth campaign.”

Section 134(5) of the Condominium Act, 1998 does not allow the applicant to expend or authorize its counsel to expend any amount and then ask that it be completely indemnified for costs that are otherwise disproportionate and unreasonable. The Court retains its discretion to determine what amount of costs is fair and reasonable and to award no costs where appropriate.

The application judge went on to hold that the amount TSCC spent on the compliance order was excessive given that the legal issues were relatively straightforward, and its counsel, Mr. Fine, is an expert in condominium law.

She described the time counsel spent preparing the application materials (some 196 hours in total) as “overkill”. Similarly, she found that the nearly 36 hours counsel spent on legal research was not warranted.

In arriving at this figure, it appears that the application judge essentially came up with what she thought was a reasonable amount for TSCC to have paid its lawyers to obtain the compliance order. There is no arithmetic to support the amount of $95,000.

An appellate court will not interfere unless the trial judge considered irrelevant factors, failed to consider relevant factors, or reached an unreasonable conclusion.
 
Ordinarily, an appellate court will defer to a trial judge’s decision to reduce a bill of costs because the successful party overspent on the litigation. This holds true even when the trial judge does not “show her work” – that is, when the final number is not accompanied by a detailed breakdown of how it was arrived at.

Disposition
"I would grant leave to appeal the costs award and allow the costs appeal. I would refer the costs back to the application judge for reassessment. In light of the already protracted history of this dispute I would urge the parties to sit down and attempt to settle the costs, and, failing which, to seek an expedited date for this matter."

Costs of the main appeal
TSCC is entitled to partial indemnity costs for the costs of responding to the appeal of the compliance order, plus additional actual costs in accordance with s. 134(5) of the Act. In respect of the oppression application appeal, TSCC is entitled to partial indemnity costs.

Costs of the cross-appeal
"To a great extent TSCC was responsible for the problems associated with the costs order made by the application judge. In these circumstances I would make no costs award in respect of the cross-appeal."

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