Superior Court refuses to reserve costs to arbitrator in landlord-tenant case

Given the parties’ agreement to resolve disputes through mediation/arbitration, the Ontario Superior Court granted a landlord’s motion to stay the tenant’s application to restrain it from terminating the tenancy and awarded the landlord costs of $13,500. 

In 1000850372 Ontario Inc. v. Core Urban Pipeline LP, 2026 ONSC 1070, the applicant tenant applied for an interim and permanent injunction restraining the respondent landlord from terminating its tenancy and excluding the tenant from the rented unit. The tenant also requested relief from forfeiture. 

The court granted the landlord’s motion to stay the tenant’s application pending arbitration and dismissed the tenant’s request for an injunction and relief from forfeiture, without prejudice to its ability to reapply for such relief with better evidence. 

As the successful party, the landlord sought partial indemnity costs of the application and the motion amounting to $20,183.47, representing fees of $17,815, harmonized sales tax (HST) of $2,315.95, and disbursements of $52.52. 

The landlord’s lawyers claimed over 52 hours for lawyer-client meetings, the review and preparation of the application and responding materials, and court attendances. 

The tenant sought six hours of partner time and 13.1 hours of associate time. The tenant alleged that the landlord sought excessively high and unreasonable costs, more than triple the tenant’s legal costs of $6,521.28. 

The tenant argued that the landlord’s claim for the time of two partners and a senior associate was disproportionate, unnecessary, and inefficient, and that its claim for an articling student’s time to attend the hearing was unjustified. 

The tenant asserted that the landlord’s lawyers did not do more work than its own lawyers, that the landlord’s factum contained the lease agreement’s excerpts, and that the landlord’s responding affidavit included largely duplicative, irrelevant, and unnecessary material. 

The tenant asked the court to reserve costs to the arbitrator. The tenant contended that awarding costs at this stage would be unfair if the arbitrator later found the landlord’s termination of the lease unlawful. 

Alternatively, the tenant alleged that the landlord should get $6,500 in partial indemnity costs at most. 

Cost award

In the landlord’s favour, the Ontario Superior Court of Justice found a partial indemnity costs award of $13,500 – including HST and disbursements – fair, reasonable, and proportionate in the circumstances. 

In its calculation, the court considered: 

• the relevant factors 
• the balancing exercise required under r. 57.01 of the Rules of Civil Procedure, RRO 1990, Reg 194 
• the guidance provided by Boucher v. Public Accountants Council for the Province of Ontario, 2004 CanLII 14579 (ON CA) 

The court rejected the tenant’s request to reserve costs to the arbitrator because: 

• The court controlled the costs of proceedings before it 
• The arbitrator did not clearly have the power to award such costs, given the language of s. 19.3(f) of the parties’ lease agreement regarding the arbitration costs, including the arbitrator’s fees, administrative fees, and reasonable attorney’s fees 

Due to the lack of detailed dockets, the court could not see who performed what work and how much time each task took. The court determined that the tenant should not pay the costs of the articling student’s attendance at the hearing because the attending lawyer made the substantive submissions. 

The court reduced the number of hours to be indemnified due to some duplicative work on the file. The court noted that three lawyers, with experience ranging from 13–18 years, claimed fees for client meetings and the review of the application and responding materials. 

Lastly, the court considered the following: 

• The landlord wholly succeeded on its motion 
• The issues in the application and the motion were important to both parties 
• The landlord responded immediately to the application brought on an urgent basis 
• More than one lawyer had to assist in preparing the landlord’s response to the application in a very short period of time 
• The case did not involve voluminous application and motion materials 
• The tenant could reasonably expect to pay costs if it failed 
• The hourly rates claimed on a 60 percent partial indemnity basis were fair and reasonable 
• The amount of disbursements sought was reasonable