2013 ONSC 239, 2013 ONSC 239

CITATION : Royal Bank of Canada v. Metropolitan Toronto Condominium Corporation No. 1226, 2013 ONSC 239 COURT FILE NO.: 12-35966 DATE: 2013/01/14 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: ) ) Royal Bank of Canada ) ) ) Jeffery Kukla, Counsel for the Applicant ) Applicant ) ) - and - ) ) ) Metropolitan Toronto Condominium Corporation No. 1226 ) ) ) Megan L.

Mackey, Counsel for the Respondent ) Respondent ) ) ) RULING WITH RESPECT TO COSTS Whitten, J. [ 1 ] By ruling dated September 17, 2012, this court ruled that the applicant was indeed entitled to a discharge of a lien filed by the respondent pursuant to s. 85 of the Condominium Act S.O. 1998 c.19 . That ruling concluded with the usual invitation for agreement as to entitlement and the quantum of costs or submissions. The latter have now been received.

Although the court did mention in the ruling the provisions of rule 57.07, the possible invocation of that rule is not a factor in the determination at hand. [ 2 ] Section 131(1) of the Courts of Justice Act establishes that costs are in the discretion of the court. As with any discretion, it is to be exercised with an eye to principle and fairness. [ 3 ] Rule 57.01 sets out the general principles applicable to the determination of costs. The pertinent principles in this matter are: the complexity and importance of the issues and the efficiency of the litigation step.

By “efficiency”, it is meant that the jurist regards the behavior of the litigants with a view to determining whether a particular step and response was necessary and competent. Obviously there is a broad range of litigation steps and responses from the purely obstructive to the advancement of a genuine legal or factual issue. [ 4 ] This application was of importance to mortgagees and condominium unit owners generally in determining what appropriate costs are to be included in the discharge of a lien filed by a corporation for unpaid common expenses.

The ramifications for the unit owner is that their equity stands to be diminished; for the mortgagee, there are fiduciary duties with respect to the funds dispersed. If there are no parameters as to the appropriate costs to be included, both unit owner and mortgagee can be at the mercy of the condominium corporation. This is above and beyond the delay experienced in obtaining a discharge which, in some cases, would

frustrate the possibility of a transfer of ownership. [ 5 ] The Condominium Act , by its language, sets out a straightforward mechanism for the discharge of common expense liens. The ruling of October 17, 2012, described a tortuous and evasive route to the discharge of the lien in this particular case. More expense was generated for both sides and was caused by the position taken by F&D, former counsel for the respondent.

The economies to be gained by an early filing of a notice of discontinuance of the action on behalf of the corporation and the provision of a discharge of the lien were obvious. [ 6 ] Former counsel introduced into what would normally be a straightforward exercise extraneous factual considerations. The behavior of one of the unit holders in other non-related matters was of no consequence to a bank seeking to discharge a common expense lien.

In a way, the bank was dragged along by F&D in its characterization of the original unit owners, incurring more expenses for both bank and the condominium corporation. [ 7 ] The response of F&D to this simple request for a discharge was not well thought out. The statutory regime was forgotten. The response was not a competent response. The details of additional expenses incurred by F&D were not really “details” at all, but merely notations of actions taken by various staff and members of a firm, without a description of the purpose behind the actions.

It would have been difficult for an objective observer to determine what, exactly, was being done to merit the additional expense. [ 8 ] It would be hard to characterize the conduct in this response to a request for a discharge as being malevolent or a function of attrition, such that the substantial indemnity rate should apply. However, the careless and inept response merits a level of costs between substantial indemnity and partial indemnity. [ 9 ] The bill of costs submitted by the applicant reveals acceptable hourly rates and time expended.

It is acknowledged that some time was expended because of the express concern of the court with respect to “reliance”. This musing by the court ultimately played no role in the ruling rendered. For that reason, it is appropriate to “back out” a sum representing the efforts of counsel in that regard, as it was not directly the result of the actions of either party. [ 10 ] The disbursements of $1,098.75 are acceptable. Given the comments above as to the appropriate level of costs, the fees payable to the applicant are fixed at $10,000.00, plus the appropriate HST.

These costs are to be paid forthwith. [ 11 ] As indicated in the correspondence accompanying the cost submissions, counsel will arrange with the trial coordinator for a time to consider the implications of rule 57.07. That scheduling, of course, is premised on the fact that counsel will not be able to resolve between themselves as to whether there should be a contribution to the costs found above by the former law firm. ___________________________ Whitten J. Released: January 14, 2013 COURT FILE NO.: 12-35966 DATE: 2013/01/14

ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: Royal Bank of Canada Applicant - and – Metropolitan Toronto Condominium Corporation No. 1226 Respondent RULING WITH RESPECT TO COSTS WHITTEN J. ACRW // dm Released: January 14, 2013