



COURT OF APPEAL FOR ONTARIO

CITATION: Lone Oak Properties Ltd. v.
    Baillie, 2020 ONCA 614

DATE: 20200929

DOCKET: C67421

Pepall, Benotto and Coroza JJ.A.

BETWEEN

Lone
    Oak Properties Ltd.

Applicant (Appellant)

and

Clayton Baillie and Wilma Baillie

Respondents (Respondents)

Michelle L. Kropp and Kenneth J.
    Peacocke, for the appellant

Matthew J. R. Chapman, for the
    respondents

Heard and released orally: September 25, 2020
    by video conference

On
    appeal from the judgment of Justice Lynda Templeton of the Superior Court of
    Justice, dated August 6, 2019.

REASONS FOR DECISION

[1]

The appellant is a developer of a small
    subdivision. The respondents purchased a vacant lot from the appellant which
    was subject to a time-limited restrictive covenant limiting the size of
    ancillary buildings to 48 by 24 feet. The respondents built a shed measuring 60
    by 30 feet. The appellant applied to the Superior Court for a declaration that
    the shed breached the covenant and for an order requiring its removal.

[2]

The application judge dismissed the appellants
    application with costs of $29,000. This reflected costs on a partial indemnity
    basis up to the date of the respondents offer to withdraw the application and on
    a substantial indemnity basis thereafter.

[3]

The appellant appeals the dismissal of its
    application and the award of costs.

[4]

The restrictive covenant expired on September
    15, 2019 and this would indicate that the appeal is moot.

[5]

The appellant submits that there are community
    interests at stake and as such, this court should exercise its discretion to
    hear and determine the appeal on its merits.

[6]

We do not agree.

[7]

As found by the application judge, the
    restrictive covenant was not part of a building scheme. The tangible and
    concrete dispute between the parties has disappeared, there is no evidence that
    it will recur, and there is no issue of public or constitutional importance
    (see:
Borowski v. Canada,
[1989]1 S.C.R. 342 at para. 39).

[8]

The appellant seeks leave to appeal costs.

[9]

Rule 49.10(7) provides that when the defendant
    (in this case the respondent) makes an offer, and the plaintiff (in this case
    the appellant), obtains a judgment that is as favourable or less favourable
    than the offer to settle, the defendant is entitled to partial indemnity costs.
    There is nothing in the rule that would support an award of substantial
    indemnity costs when the plaintiff obtains nothing (see
Groh v. Steele
,
    2017 ONSC 4925 at paras 8,9).

[10]

The respondent submits that, nonetheless, the
    award of costs is a matter of discretion and it was open to the application
    judge to award substantial indemnity costs after the date of the offer. The award
    of substantial indemnity costs is extraordinary. The application judge
    erroneously anchored her award of substantial indemnity costs on r. 49 and did
    not articulate reasons for the award or its timing beyond a reference to the
    respondents offer to settle.

[11]

The application judge erred by awarding costs on
    a substantial indemnity basis to the respondents after the date of their offer.

[12]

Leave to appeal costs is granted and the costs
    award is reduced to $20,000. The appeal is otherwise dismissed as moot. Costs
    of the appeal are payable to the respondent in the amount of $10,000 inclusive
    of disbursements and HST.

S.E.
    Pepall J.A.

M.L.
    Benotto J.A.

S.
    Coroza J.A.


