



COURT OF APPEAL FOR ONTARIO

CITATION:

Toronto Standard Condominium
    Corporation No. 1633 v.
Baghai Development Limited, 2012 ONCA 417

DATE: 20120619

DOCKET: C52283

Rosenberg, Simmons and Armstrong JJ.A.

BETWEEN

Toronto Standard Condominium Corporation No. 1633

Applicant (Respondent/Appellant
    by way of cross-appeal)

and

Baghai Development Limited and Rabba Fine Foods
    Inc.

Respondents (Appellants/Respondents
    by way of cross-appeal)

Kevin D. Sherkin, for the appellant/respondent by way of
    cross-appeal Baghai Development Limited

Wolfgang Kaufmann, for the appellant/respondent by way
    of cross-appeal Rabba Fine Foods

Jonathan H. Fine and Bradley Chaplick, for the
    respondent/appellant by way of cross-appeal Toronto Standard Condominium
    Corporation No. 1633

Heard: January 3, 2012

On appeal from the orders of Justice Lois B. Roberts of
    the Superior Court of Justice, dated June 11, 2010 and May 13, 2011, with
    reasons reported at 2011 ONSC 2307, and from the costs endorsements dated June
    14, 2011, with reasons reported at 2011 ONSC 2560, and June 22, 2011, with
    reasons reported at 2011 ONSC 3909.

Armstrong
    J.A.:

[1]

This appeal arises from a relatively simple, fact-specific dispute:  can
    a grocery store in a commercial condominium unit display its merchandise on the
    adjacent sidewalk?  The rules of the condominium corporation say no.  The terms
    of grocery stores lease say yes.  The parties disagree over which document
    governs, and brought competing applications in the Superior Court to resolve
    the issue.

[2]

Following a protracted legal battle, the application judge held in the
    condominium corporations favour.  She proceeded to award the condominium
    corporation roughly half of what it sought in costs.  The grocery store and its
    landlord appeal on the merits.  The condominium corporation seeks leave to
    appeal the costs award.

[3]

As I will explain, I agree with the application judge that the
    condominium corporations rules take precedence over the grocery stores
    lease.  I would therefore dismiss the main appeal.  On the cross-appeal, it
    appears that the application judge discounted counsels hourly rates
    significantly because she thought the amounts claimed were excessive.  But she
    did not clearly explain how she arrived at the costs award, which makes it
    impossible for this court to assess its reasonableness.  I conclude,
    reluctantly given the already lengthy history of these proceedings, that leave
    to appeal costs should be granted and the matter should be remitted to the
    application judge for a reconsideration if the parties cannot resolve it
    themselves.

BACKGROUND

The parties

[4]

Baghai Development Limited ("Baghai") owns a number of
    commercial units in a mixed-use condominium project in the Yonge-Sheppard area
    of Toronto.  Baghai leases five ground-floor units to Rabba Fine Foods Inc.
    ("Rabba"), a grocery store.    Toronto Standard Condominium
    Corporation No. 1633 (TSCC) operates the condominium complex.

The dispute

[5]

From the time the condominium complex opened in 2005, Rabba displayed
    fruits and vegetables on two carts on the sidewalk in front of its store. 
    Rabba also occasionally displayed merchandise, including flowers and seasonal
    items such as pumpkins and firewood, directly on the sidewalk next to the
    produce carts.

[6]

TSCC objected to this practice at the outset.  It argued that Rabbas
    outdoor displays violated the condominium corporations declaration and rules
    prohibiting the use of common elements, including sidewalks, for anything other
    than ingress and egress. Baghai and Rabba maintained that their lease agreement
    expressly allowed Rabba to display its wares on the sidewalk.  The relevant
    portions on these documents are set out in an appendix at the end of these
    reasons.

[7]

In 2005, and again in 2007, the parties agreed that Rabba could continue
    to use the sidewalk to display merchandise, provided certain conditions were
    met.  But there were still complaints, and in 2009, TSCC brought an application
    against Baghai and Rabba for compliance with the declaration and rules of the
    condominium corporation pursuant to s. 134 of the
Condominium Act, 1998
,
    S.O. 1998 c. 19 (the "Act").

[8]

Baghai and Rabba opposed the application on three bases.  First, they
    argued that the application was barred by the two-year limitation period in the
Limitations Act, 2002
, S.O. 2002, c. 24, Sched. B.  Second, they
    argued that the registration of Rabbas lease bound TSCC and all unit holders
    in the condominium.  Third, they argued that a trial was required to determine
    whether TSCC was bound by the terms of the 2005 and 2007 agreements to allow
    Rabba to continue using the sidewalk for display.

PROCEEDINGS BEFORE THE APPLICATION
    JUDGE

[9]

The hearing before the application judge proceeded in three stages.

(1)

The first stage:
    spring 2010

[10]

TSCCs
    application was heard on May 26 and 27, 2010.  In an endorsement dated June 10,
    2010, the application judge found that Rabbas use of the sidewalk was
    expressly prohibited by TSCCs declaration and rules.

[11]

On
    the limitations issue, the application judge acknowledged that TSCC had
    complained to both Rabba and Baghai about the outdoor displays as early as
    2005.  However, she concluded that TSCCs application was not time-barred.  She
    explained, at para. 5:

The undisputed evidence establishes very clearly that the
    manner in which Rabba has been using the common elements for display purposes
    is not uniform or constant, and has fluctuated since Rabbas use first came to
    the applicants attention and became the subject of the applicants complaints
    to Baghai from 2005 to the present time.
As such, Rabbas impugned use of
    the common elements is not an isolated act but a series of different and
    separate uses of the sidewalk for the purposes of displaying its merchandise in
    various ways, each of which constitutes fresh breaches of the rules, thus
    giving rise to separate causes of action by the condominium corporation.
[Emphasis added.]

[12]

The
    application judge also rejected the related argument that TSCC had waived its
    right to demand compliance with its declaration, rules and by-laws.  In so
    holding, she relied on s. 33 of the TSCCs declaration, which states:

The failure to take action to enforce any provision contained
    in the Act, the Declaration, the by-laws or the Rules of the Corporation,
    irrespective of the number of violations or breaches which may occur, shall not
    constitute a waiver of the right to do so thereafter, nor shall same be deemed
    to abrogate or waive any such provision.

[13]

The
    application judge then considered, and rejected, the argument that the
    registration of the notice to lease was binding on TSCC and all unit-owners in
    the condominium.  She explained, at para. 13:

The notice to lease expressly provides that Rabbas right to
    occupy and use the common element sidewalk for the purpose of displaying its
    merchandise is subject to compliance with all applicable laws, including  the
    condominium corporations declaration, by-laws and rules.

[14]

She
    concluded, at para. 17: Having failed to register and disclose Rabbas alleged
    right under the lease, Baghai cannot impose its private agreement with Rabba on
    the condominium corporation and its unit-owners.

[15]

Despite
    this, the application judge was nonetheless persuaded that oral evidence was
    required to determine what impact, if any, the 2005 and 2007 agreements had on
    Rabbas right to continue displaying its merchandise on the sidewalk.  She
    directed a trial on two issues:

(i)

Whether TSCC entered into binding
    agreements with Baghai and/or Rabba to allow Rabba the use of the sidewalk to
    display its goods, or if TSCC should be estopped by its acts or omissions from
    prohibiting Rabba the use of the sidewalk; and

(ii)

If there was a binding agreement,
    whether Baghai and/or Rabba breached that agreement by the manner in which
    Rabba displayed its goods.

(2)

The second stage:
    fall 2010

[16]

The
    trial of the issues was scheduled for November 15 and 16, 2010.  Five days
    before the trial was to start, Baghai filed an application for relief from
    oppression under s. 135 of the Act.  In the application, Baghai claimed that
    TSCC acted oppressively by failing to honour the agreements with Baghai and
    Rabba to permit the sidewalk displays.

[17]

The
    trial of the issues proceeded as scheduled on November 15 and 16 2010.  One
    additional hearing day was required, on December 8, 2010.

[18]

The
    application judge delivered her endorsement in respect of the second stage on
    May 13, 2011.  She concluded that neither the 2005 nor the 2007 agreements
    bound TSCC to permit Rabba to display its merchandise on the sidewalk.  She
    also held that Rabba had breached its obligation not to display merchandise on
    the sidewalk.  Finally, she refused Baghais request to reconsider the
    limitations issue, and confirmed her earlier decision that the limitation
    period had not expired.

The effect of the 2005 and 2007 agreements

(a)    The 2005 Agreement

[19]

The
    2005 agreement was described by one of TSCCs witnesses as a gentlemans
    agreement and an informal, good faith gesture meant to ensure a positive
    working relationship between the condominium board and Rabba.  The application
    judge accepted this evidence.  She found, at para. 40, that the 2005 agreement
    was a working arrangement to allow Rabba to put display stands in front of its
    store in exchange for Rabba giving up its advertising rights on its windows. 
    She characterized the 2005 agreement, at para. 42:

I agree with [TSCCs] characterization that the agreement
    represented a compromise to accommodate a valued tenant but that it was clearly
    an arrangement that was subject to termination if Rabba did not maintain its
    stands in a neat condition or if Rabba placed anything on the common element
    sidewalk.

[20]

The
    application judge then turned her mind to whether there had been any breaches
    of the 2005 agreement.  She found that over the course of the next two years,
    there were a number of complaints that Rabba was not holding up its end of the
    bargain.  The complaints were not necessarily related to the stands, but rather
    with Rabba placing boxes of pumpkins, apples, bread bins, milk cans, charcoal,
    barbeque starters, fireplace logs and flowers on the sidewalk.  TSCC expressed
    concerns both about the safety of these items blocking the sidewalk, and about
    their unsightly appearance.

[21]

TSCC
    raised these issues with Baghai and Rabba and demanded that all displays be
    removed.  In a memorandum dated May 10, 2007, Shane Baghai, the principal of
    Baghai Development Limited, conceded that Rabba had failed to comply with the
    2005 agreement:

I visited Rabbas store today and I have to agree that the
    displays are excessive, poorly displayed, and with inappropriate items such as
    barbeque starters (hazardous accelerants, charcoal, etc.).  Furthermore, the
    displays had occupied more than 50% of the sidewalk and pedestrian row.

I spoke to Jack Rabba last week, who sounded extremely
    understanding, who promised to talk to Sam, the store manager.  Apparently, Sam
    has not taken heed.

[22]

The
    application judge concluded, at para. 61, that the 2005 agreement was breached
    by Rabbas excessive and inappropriate displays.

(b)     The 2007 Agreement

[23]

In
    the spring of 2007, the parties tried again to resolve the dispute.  As a
    result of a meeting on May 30, 2007, the parties reached an agreement which
    provided, in part:

·

Rabba agreed to specific limits on the location, height, and
    contents of its sidewalk display stands;

·

Rabba agreed not to store any racks, pallets, boxed or
    shipping-related items on the sidewalk, other than for a two-hour unloading
    period;

·

There would be a 60-day trial period to allow the parties to gauge
    the level of cooperation and goodwill;

·

The condominium Board had to approve the terms of the agreement,
    and any resulting permanent agreement was to be approved by the Board, in
    writing, and signed by all of the parties; and

·

In the event that the agreement was flagrantly violated, TSCC
    could require the immediate removal of all items outside Rabbas store.

[24]

Rabba
    apparently complied with this arrangement during the trial period.  However, by
    the fall of 2008, the evidence suggests that Rabba was in breach of its 2007 agreement
    for the same kinds of violations as before.  The application judge held, at
    para. 99:

The evidence establishes that, while not as flagrant as
    before, after May 30, 2007, Rabbas displays continued to be messy and Rabba
    continued to place and leave items on the common element sidewalk and not on
    the display stands (other than temporarily for the purpose of receiving
    deliveries) in breach of its agreement with the applicant and Baghai.

(c)     Were the agreements enforceable against TSCC?

[25]

The
    application judge concluded that Rabba had breached the 2005 agreement.  That
    agreement was subsequently replaced by the 2007 agreement, which Rabba also
    breached.  The application judge further concluded that, regardless of the
    latter breach, the 2007 agreement was expressly subject to permanent approval
    by the TSCC board.  Since that approval was never sought or obtained, the
    agreement was not enforceable.

(d)     The oppression application

[26]

In
    its oppression application, Baghai sought to require TSCC to enter into an
    agreement that would permit Rabba to display its merchandise in front of its
    store.  It relied on s. 98 of the Act, which provides in part:

An owner may make an addition, alteration or improvement to the
    common elements that is not contrary to this Act or the declaration if,

(a)The board, by
    resolution, has approved the proposed addition, alteration, or improvement.

[27]

Baghai
    relied on the evidence of two Board members who testified that if they had
    known what needed to be done to enter into a permanent agreement, the Board
    would have done so.  Baghai claimed that the Boards failure to honour its
    agreements constituted oppressive conduct under s. 135 of the Act.

[28]

In
    light of all the circumstances, including the fact that a permanent agreement
    was never reached, the application judge concluded that TSCCs conduct was not
    oppressive. Further, she held that there was no agreement to enforce in any
    event.  She explained, at para. 124:

Although Baghai argues that the applicant should be compelled
    to honour its agreement, there is no agreement that this court can enforce. 
    In the circumstances of this case, where there are so many variables to be
    negotiated and concluded, this court has no jurisdiction to compel the parties
    to negotiate a permanent and an enforceable agreement or arrangement in
    accordance with the Act and the applicants Declaration, By-laws and Rules.

(e)     The limitations issue revisited

[29]

Finally,
    Baghai submitted that as a result of further evidence provided at the trial of
    the issues, as well as an intervening decision of the Divisional Court, the
    application judge should reconsider and change her decision in respect of the
    limitation period.  She declined to do so.

(3)

The third stage:
    spring 2011

(a)

The parties submissions

[30]

The third stage of the proceedings before the application judge
    concerned costs.  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
. [Emphasis added].

[31]

Baghai
    and Rabba acknowledged that, as the successful party, TSCC was entitled to an
    award of costs.  However, they disputed TSCCs 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.

(b)

The application
    judges June 14, 2011 costs endorsement

[32]

The
    application judge began her analysis by reviewing the principles established by
    this court in
Metropolitan Toronto Condominium Corp. No. 1385 v. Skyline
    Executive Properties Inc.
(2005), 197 O.A.C. 144 (C.A.).  In that case,
    Doherty J.A. explained the distinction between an award of costs under s. 131
    of the
Courts of Justice Act
, R.S.O. 1990, Chap. C. 43, and
    additional actual costs under s. 134(5) of the Act.  He wrote, at para. 8:

An award of costs refers to the costs that the court orders
    one litigant to pay to another litigant.
Additional actual costs
    can encompass those legal costs owing as between the client and its own lawyer
    beyond the costs that the court had ordered paid by an opposing party
. To
    the extent that the legal bills owed by MTCC to its own lawyers exceeded the
    costs awarded against Skyline, MTCC could properly add those amounts to the
    common expenses of the Skyline units as long as MTCC could demonstrate that
    those additional legal costs were incurred in obtaining the compliance order.
    [Emphasis added.]

[33]

Justice
    Doherty also drew a distinction between obtaining an order and enforcing an
    order, and concluded that only costs related to obtaining an order can be added
    to the losing partys common expenses pursuant to s. 134(5).

[34]

Applying
    these principles to the case before her, the application judge held that TSCCs
    additional actual costs excluded any amount spent defending Baghais
    oppression application, because those costs did not relate to obtaining the
    compliance order.

[35]

The
    application judge went on to observe that the only additional actual costs
    submitted by TSCC were the fees and disbursements charged by counsel in excess
    of the partial indemnity costs.  She held, at para. 14, that the determination
    of these additional actual costs was subject to the courts discretion under
    s. 131(1) of the
Courts of Justice Act
and rule 57.01 of the
Rules
    of Civil Procedure
, R.R.O. 1990, Reg. 194.  She explained, at para. 15:

In other words, 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.

[36]

The
    application judge accepted that TSCC was entitled to full indemnity for
    counsels 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 TSCCs 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.

[37]

Ultimately,
    the application judge fixed TSCCs costs and additional actual costs at
    $95,000, including disbursements and taxes.

(b)     The application judges
    addendum of June 22, 2011

[38]

The
    application judge released her costs endorsement on June 14, 2011, before she
    had received TSCCs reply submissions.  She subsequently reviewed those
    submissions and released an addendum on June 22, 2011.

[39]

In
    the addendum, at para. 5, the application judge reiterated that TSCC was entitled
    to full indemnity for its fair and reasonable costs related to obtaining the
    compliance order.  She also held that TSCC was entitled to fair and
    reasonable partial indemnity costs for its successful defence of Baghais
    oppression application.  The dockets TSCC provided revealed that counsel spent
    $5,846.00 defending the oppression application. (These dockets do not appear to
    have been included in the appeal materials.)  The application judge added
    partial indemnity fees of $1,500 on this amount.

[40]

The
    application judge also accepted that TSCC spent an additional $3,918.11 on
    photocopying related to the compliance order.  She reimbursed TSCC in full for
    this amount as part of its additional added costs.

[41]

The
    application judge therefore fixed TSCCs costs at $100,418.11, including taxes
    and disbursements.

THE APPEAL AND THE CROSS-APPEAL

[42]

Baghai
    and Rabba raise three issues on appeal:

(1)

Did the application judge err by failing to find
    that the two-year limitation period had expired?

(2)

Did the application judge err by concluding that the
    waiver provisions in TSCCs declaration trump the
Limitations

Act, 2002
?

(3)

Did the application judge err by failing to grant
    the cross-application for relief from oppression?

[43]

TSCC
    seeks 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 Act as interpreted by this court in
Skyline
.

[44]

I
    will address each issue in turn.

ANALYSIS: THE MAIN APPEAL

(1)

Did the application judge err by failing to find that the two-year
    limitation period had expired?

[45]

Baghai
    submits that the application judge erred by finding that the various breaches
    of the condominiums declaration, by-laws and rules were not uniform or
    constant, thereby constituting fresh breaches giving rise to separate causes of
    action.  Rather, Baghai submits, the limitations clock started running in 2005
    when TSCC first raised objections to Rabbas use of the sidewalk.

[46]

In
    the alternative, Baghai submits that even if the evidence established that
    there were a series of separate breaches giving rise to distinct causes of
    action, TSCC was only entitled to pursue those breaches that occurred within
    the applicable two-year limitation period.  Since TSCCs application was filed
    on September 2, 2009, only those alleged breaches that occurred after September
    2, 2007, were actionable.

[47]

TSCC
    responds that the
Limitations Act, 2002,
does not apply because the
    basis of its application does not amount to a claim within the meaning of
    that statute.  The application judge does not appear to have addressed this
    question.

[48]

In
    the alternative, TSCC submits that if a limitation period applies here, it is
    the ten-year limit for adverse possession claims set out in the
Real
    Property Limitations Act
, R.S.O. 1990, Chapter L. 15.

[49]

In
    the further alternative, TSCC submits that Baghai and Rabba were in a continuing
    state of breach, and that there is no time limit for compliance with the terms
    of the
Condominium Act, 1998
.

[50]

Finally,
    TSCC submits that in August 2009, Rabba moved a display table on the sidewalk
    and affixed it with a lock.  This constituted a new and actionable breach, to
    which TSCC responded the following month by bringing its application.

[51]

Assuming
    that the
Limitations Act, 2002,
does apply and that the relief sought
    falls within the basic two-year period, Baghais appeal on this ground still fails.   
    There was evidence before the application judge to support her finding that the
    limitation period had not expired because of the repeated, and varied, nature
    of Rabbas misconduct.  Even if only those breaches that occurred after
    September 2, 2007 were actionable, those incidents alone were more than
    sufficient to entitle TSCC to the relief requested.

(2)     Did the
    application judge err by finding that the waiver provisions in TSCCs
    declaration trump the
Limitations Act, 2002
?

[52]

Baghai
    submits that the application judge erred by essentially concluding that the
    general waiver clause  in s. 33 of the condominium declaration trumps the
    limitation periods mandated in the
Limitations Act, 2002
. In support
    of this submission, Baghai points to s. 22(1) of the
Limitations Act, 2002
,
    which provides: A limitation period under this Act applies despite any
    agreement to vary or exclude it, subject only to the exceptions in subsections
    (2) to (6).  None of the exceptions apply in this case.

[53]

TSCC
    responds that there is no conflict between s. 33 of its declaration and s. 22
    of the
Limitations Act, 2002
, because the latter does not apply to
    compliance proceedings brought under the
Condominium Act
.

[54]

As
    I have already explained, I am satisfied that the conduct complained of here
    falls within the statutory two-year limitation period.  Accordingly, it is
    unnecessary for me to decide this issue.

(3)     Did
    the application judge err by failing to grant the cross-application for an
    oppression remedy?

[55]

In
    support of its oppression claim, Baghai submits that both it and Rabba had a
    reasonable expectation that the 2005 agreement was valid and binding.  Baghai
    further argues that the application judges distinction between permanent and
    temporary agreements is meaningless, because all the parties clearly thought
    the agreement was valid.  Baghai submits that if the agreements were
    unenforceable, it is only because TSCC failed to make them enforceable  i.e.
    by seeking Board approval to make them permanent.  This, Baghai argues, is
    oppressive behaviour.

[56]

Baghai
    also argues that the application judge erred by failing to differentiate
    between Rabbas permitted and non-permitted uses of the sidewalk.  Baghai
    submits that the 2005 and 2007 agreements allowed Rabba to display its
    merchandise on stands in front of the store.  The agreements did not allow
    Rabba to store all manner of items (e.g. bread skids and shipping pallets)
    outside. In fact, Baghai argues, it did not countenance the latter actions.

[57]

In
    my view, there was ample evidence to support the application judges conclusion
    that TSCC did not act oppressively against Baghai and Rabba.  I also accept
    that the evidence supported the application judges finding in respect of the
    lack of a permanent agreement and therefore her conclusion that there was no
    agreement to enforce.  Finally, she was entitled to conclude that the use of
    the display stands and of the adjacent sidewalk space were not separate issues
    and that both kinds of display were prohibited under the declaration, by-laws
    and rules of the condominium corporation.

ANALYSIS: THE CROSS APPEAL

[58]

Counsel
    for TSCC raised a number of issues on the costs appeal.  However, I find it
    necessary to deal with only two of the issues to dispose of the costs appeal:

(1)   Did the
    application judge err by failing to award full indemnity costs in respect of
    the oppression application?

(2)   Did the
    application judge err in her approach to additional actual costs under s.
    134(5) of the Act?

(1)     Did
    the application judge err by failing to award full indemnity costs in respect
    of the oppression application?

[59]

TSCC
    submits that the oppression application was no more than a defence to the
    compliance application, and its costs beyond partial indemnity rates in
    responding to the oppression application should therefore be characterized as
    additional actual costs to which full indemnity rates apply.

[60]

I
    agree with the application judges analysis on this point.  While there is
    obviously some overlap in respect of the two applications, the oppression
    application was a separate and independent application that stood on its own
    pursuant to s. 135 of the Act.  The dismissal of the oppression application
    does not attract an order for additional actual costs under s. 134(5) of the
    Act.

(2)     Did
    the application judge err in her approach to additional actual costs under s.
    134(5) of the Act?

[61]

To
    repeat, s. 134(5) of the Act 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 and the
    corporation may specify a time for payment by the owner of the unit. [Emphasis
    added.]

[62]

As
    explained above, this courts decision in
Skyline

established
    that additional actual costs under s. 134(5) include the legal costs properly
    owed by the condominium corporation to its own lawyers in obtaining a
    compliance order, above and beyond the amounts awarded by the court or an
    assessment officer.

[63]

TSCC
    submits that the application judge confused an award of costs with additional
    actual costs and treated them as if they were the same.  According to TSCC, if
    the application judge had applied
Skyline
, she would have simply made
    a partial indemnity costs award in respect of the proceedings before her.  TSCC
    would then be free to charge the difference between the application judges
    costs award and TSCCs costs of its own lawyer (full indemnity costs) to the
    Baghai units.

[64]

However,
    counsel concedes that he did not request or suggest that the application judge
    adopt that procedure.  Rather, he simply submitted a costs outline listing both
    partial and full indemnity rates, and asked the application judge to award
    TSCCs costs on a full indemnity basis throughout.  It is difficult, after the
    fact, to say that the application judge should have done something that she was
    not asked to do.

[65]

That
    said, I conclude that the application judge erred in principle by failing to
    explain how she arrived at the quantum of costs on the compliance application.

[66]

As
    explained above, TSCC calculated its costs on a partial indemnity scale at
    $172,373.01 and on a full indemnity scale at $199,020.97.  Both amounts
    included disbursements of $11,313.01.  The only difference between the partial
    indemnity costs and the full indemnity costs was counsels hourly rates.

[67]

The
    application judge explained her approach to costs on the compliance application
    at paras. 13-15 of her costs endorsement:

[13]    ...I must assess the applicants partial indemnity
    costs and determine whether the applicant has any additional actual costs
    related to the obtaining of the compliance order against Baghai and Rabba.  In
    the present case, the only additional actual costs submitted are the legal
    fees and disbursements of Fine & Deo, the applicants counsel.

[14] As the Court must determine the applicants additional
    actual costs,
the applicants entitlement to any additional actual costs
    under section 134(5) of the Condominium Act, 1998 is necessarily subject to the
    Courts exercise of its discretion under section 131(1) of the Courts of
    Justice Act and to the application of the appropriate costs principles and
    factors set out under Rule 57.01 of the Rules of Civil Procedure and in the
    relevant jurisprudence.

[15] In other words, as noted by [counsel for Baghai] ,
    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. [Emphasis
    added.]

[68]

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.

[69]

For
    example, 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.

[70]

The
    application judge presumably reduced the costs order in light of these
    assessments, but she did not indicate what the deduction was, nor did she
    indicate whether she applied full indemnity rates before factoring in that
    deduction.

[71]

The
    only references in the application judges endorsement to the assessment of
    quantum on a full indemnity scale are in paras. 19(iv) and (v):

The 34.4 hours for the attendance at the 7 cross-examinations
    and 1.5 hours at triage court hearing are all related to obtaining the
    compliance order.  The time spent is not excessive but fair and proportionate. 
    I have included this time on a full indemnity basis.

The applicant is entitled to full indemnity for its counsels
    court attendances on November 13, 2009, May 26, 27, November 15, 16 and
    December 8, 2010, which amount to about 40 hours.  The hours of preparation
    claimed for those attendances in excess of 100 hours  are excessive for a
    senior practitioner like Mr. Fine who is an expert in condominium law.

[72]

Unfortunately,
    it is not possible to discern from the above paragraphs what deduction was
    applied for the excessive hours of hearing preparation.

[73]

Ultimately,
    the application judge ordered Baghai and Rabba to pay costs of $95,000.  This
    was subsequently increased to $100,418.11 when additional photocopying costs
    and partial indemnity costs of defending the oppression application were included. 
    This was roughly half of what TSCC spent on the application.

[74]

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.  This may have been a reasonable number, but the calculation
    of it is not apparent from the application judges endorsement.

[75]

It
    is trite law that a trial judge has wide discretion to award costs.  An
    appellate court will not interfere unless the trial judge considered irrelevant
    factors, failed to consider relevant factors, or reached an unreasonable
    conclusion:
Canadian Pacific Ltd. v. Matsqui Indian Band
, [1995] 1
    S.C.R. 3.

[76]

Ordinarily,
    an appellate court will defer to a trial judges 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.  Rather,
    where the record discloses a proper basis for the judges exercise of
    discretion, the absence of reasons, on its own, does not justify appellate
    intervention:
McPhee v. Canadian Union of Public Employees
, 2008 NSCA
    104, (2008), 270 N.S.R. (2d) 265 (C.A.), leave to appeal to S.C.C. refused
    [2008] S.C.C.A. No. 546.

[77]

The
    difficulty in this case is the application judge was not simply tasked with
    making an award of costs pursuant to s. 131 of the
Courts of Justice Act
and rule 57.01 of the
Rules of Civil Procedure
.  She was also asked
    and acceded to the request to make an order for additional actual costs under
    s. 134(5) of the
Condominium Act, 1998
.  Both types of costs orders
    must be reasonable, but the measure of reasonableness differs with each. In my
    view, this is where the application judge fell into error.

[78]

Justice
    Doherty explained the distinction in
Skyline
, at para. 45:

As actual legal costs refers to those costs properly claimed by
    a lawyer against his or her own client, the principles governing the assessment
    of legal bills as between a lawyer and his or her client, should govern any
    dispute between MTCC and Skyline as to the propriety of any part of the legal
    bills relied on by MTCC in support of a claim for additional legal costs
    under s. 134(5): see Mark M. Orkin,
The Law of Costs
, 2
nd
ed., looseleaf (Aurora, Ont: Canada Law Book Inc., 2004) at 602FF.

[79]

In
    the above reference, Mr. Orkin says the following:

There is a clear distinction between a judge fixing the costs
    of a successful litigant and an assessment officer assessing the fees of the
    successful litigants counsel.  A judge fixing costs must determine what is
    reasonable for the losing party to pay.
By contrast, an assessment officer
    conducting a solicitor-client assessment must determine what is reasonable for
    the client to pay in light of the circumstances between the solicitor and the
    client.
These analyses, it has been held, can lead to different results,
    especially where the judge fixes fees based, in part, on docketed time and the
    assessment officer assesses fees by applying
quantum meruit
. [Emphasis
    added.]

[80]

At
    para. 14 of her costs endorsement, the application judge held that TSCCs
    entitlement to additional actual costs was necessarily subject to the
    courts exercise of discretion under s. 131(1) of the
Courts of Justice Act
and rule 57.01 of the
Rules of Civil Procedure
.  In the addendum to
    her costs endorsement, at para. 5, the application judge noted that TSCC was
    entitled to full indemnity
for its fair and reasonable costs
related
    to obtaining the compliance order (emphasis added).  But she does not explain
    in either passage whether the costs ordered were fair and reasonable for
    Baghai and Rabba to pay TSCC (as with an award of costs), or whether they were
    fair and reasonable for TSCC to pay its own lawyers (as with an award under
    s. 134(5)).  Only the latter assessment was relevant.

[81]

If the application judge assessed the reasonableness of the
    additional actual costs by reference to what Baghai and Rabba could be
    expected to pay the winning party, TSCC, this was an error in principle.  If
    the application judge assessed the reasonableness of the additional actual
    costs by reference to what TSCC could be expected to pay its own counsel, she
    failed to explain how she arrived at what she thought was the right amount. 
    This, too, was an error in principle.

[82]

I
    conclude reluctantly, given the already drawn-out nature of the litigation,
    that the matter of costs should be remitted to the application judge for
    reconsideration.  While the appropriate scale of costs for the application
    judge to consider would ordinarily be restricted to the partial indemnity
    scale, counsel, as I have already observed, requested the judge to make an
    award that includes additional actual costs.  While this should not be taken
    as the normal course, I would make such an order in the circumstances of this
    case in order to avoid further prolonged litigation.

[83]

The
    reconsideration should start from the premise that TSCC is entitled to be fully
    indemnified for having obtained the compliance order.  The application judge
    must then explain what amounts, if any, should be deducted based on the
    principle of
quantum meruit
.

[84]

In
    remitting the matter back to the application judge, I emphasize that while s.
    134(5) of the Act may entitle TSCC to more than it would get in an ordinary
    award of costs, the provision for additional actual costs does not
    automatically lead to whatever amount is claimed.  Section 134(5) does not give
    counsel licence to spend the clients money with impunity.

[85]

As
    I have just explained, there is a difference between the quantum of costs a
    losing party is reasonably expected to pay to the successful party, and the
    quantum of costs the successful party is reasonably expected to pay its own
    lawyer.  But reasonableness remains the touchstone of both analyses.

DISPOSITION

[86]

I
    would dismiss the appeal on the merits in respect of the compliance application
    and the oppression application.  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

[87]

In
    accordance with Skyline, 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.

[88]

If
    the parties cannot agree on what these costs should be, then counsel for TSCC
    should submit a new bill of costs and costs submissions limited to seven pages,
    double-spaced, within 15 days of the release of these reasons. Counsel for
    Baghai and Rabba can then file a response within ten days, limited to seven
    pages, double-spaced.

Costs of the cross-appeal

[89]

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.

Released:

JUN 19 2012                                    Robert P.
    Armstrong J.A.

MR                                                  I
    agree M. Rosenberg J.A.

I
    agree Janet Simmons J.A.


APPENDIX

TSCC No. 1633 Declaration

Section 12(a): Each owner may make reasonable use of and has
    the right to occupy and enjoy the whole or any part of the common elements, and
    each owner has the right to make reasonable use of, and has the right to enjoy
    and exclusive use common element area which has been designated to his Unit in
    Schedule F, subject to any conditions and restrictions set out in the Act,
    the Declaration, the Corporations by-laws, and the Rules and easement and
    rights registered against the property.  However, no condition shall be
    permitted to exist and no activity shall be carried out in the common elements
    that is likely to damage the property or that will unreasonably interfere with
    the use or enjoyment by other Owners of the common elements and the other
    Units.

Section 12(b): No Owner shall make any installation or any
    change or alteration to an installation upon the common elements, or maintain,
    decorate, alter or repair any part of the common elements, except for
    maintaining those parts of the common elements which he has a duty to maintain,
    without obtaining the written approval of the Corporation in accordance with
    the Act, unless otherwise provided for in this Declaration.

Section 18(c)(4): Notwithstanding any provision in this
    Declaration or in any by-laws or Rules hereafter passed or enacted to the
    contrary, an owner of a retail Unit, its tenant and their designated agents
    and/or employees shall not be permitted access to any portion of the common
    elements save and except to gain access to and egress from his retail Unit.

Schedule A of By-Law No. 1

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.

Offer to lease

Section 8: [T]he 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.


