Agriculture, Food and Rural Affairs Appeal Tribunal
1 Stone Road West Guelph, Ontario N1G 4Y2 Tel: (519) 826-3433, Fax: (519) 826-4232 Email: AFRAAT@ontario.ca
Tribunal d’appel de l’agriculture, de l’alimentation et des affaires rurales 1 Stone Road West Guelph (Ontario) N1G 4Y2 Tél.: (519) 826-3433, Téléc.: (519) 826-4232 Courriel: AFRAAT@ontario.ca
AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL
APPEAL: Ellis Drain Branch ‘A’ 2017 (RE) [Cost Decision] Township of Malahide
Ellis Drain Branch ‘A’ 2017 (RE) [Cost Decision]
STATUTE: Drainage Act
HEARING: December 14, 2018
DATE OF DECISION: January 7, 2019
016EllisDrain18
NEUTRAL CITATION: 2019 ONAFRAAT 01
ELLIS drain Township of Malahide, Ontario
IN THE MATTER OF THE DRAINAGE ACT, R.S.O. 1990, CHAPTER D.17, AS AMENDED,
AND IN THE MATTER OF: Appeal to the Agriculture, Food and Rural Affairs Appeal Tribunal by Can-Am Pepper Company Ltd. under section 64 of the Drainage Act regarding the Ellis Drain, in the Township of Malahide, Ontario.
Before: John O’Kane, Vice-Chair, Ed Dries, Vice-Chair, and Sarah Judd, Member
Appearances: Chad Underhill, co-owner and Vice-President of the Appellant, Can-Am Pepper Company Ltd. Paul Courey, counsel for the Respondent, Township of Malahide J.M. Spriet, P.Eng., engineer who prepared the report Robert (Bob) Lopez, Drainage Superintendent for the Township of Malahide
COSTS DECISION OF THE TRIBUNAL
On December 14, 2018 the Tribunal released its reasons for decision dismissing the appeal by Can-Am Pepper Company Ltd. under section 64 of the Drainage Act, R.S.O. 1990, Chapter D.17 (the “Act”) about the quality of construction of the Ellis Drain Branch “A” 2017. In those reasons for decision, the Tribunal invited the parties to make written submissions about the costs of the appeal.
The respondent Township of Malahide (the “Township”) seeks an order for its costs on a full indemnity basis of $7,264.24. The appellant Can-Am Pepper Company Ltd. seeks an order that each party pay for its own costs.
After considering the written costs submissions of the parties, the Tribunal concludes that it is appropriate that the appellant Can-Am Pepper Company Ltd. pay the respondent Township costs of $5,822.89.
The Tribunal Has Two Sources of Authority to Award Costs
- The Drainage Act
The Act gives the Tribunal broad discretion regarding costs of proceedings. Subsection 98(10) provides:
The costs of any proceeding before the Tribunal shall be paid by or apportioned between the parties in such manner as the Tribunal considers proper….
The Tribunal has created Rules of Procedure and in Rule 31.08 has created a rule titled “Assessment of Costs” specifically for appeals under the Act. Rule 31.08 essentially mirrors the wording from subsection 98(10) of the Act.
- The Statutory Powers Procedure Act
Besides that discretionary authority in the Act, the Statutory Powers and Procedure Act (the “SPPA”) gives the Tribunal discretion to award costs in proceedings, where the Tribunal has created rules related to costs. Section 17.1 of the SPPA provides:
Subject to subsection (2), a tribunal may, in the circumstances set out in rules made under subsection (4), order a party to pay all or part of another party’s costs in a proceeding.
The exception to that discretionary cost award authority is set out in subsection (2):
A tribunal shall not make an order to pay costs under this section unless, the conduct or course of conduct of a party has been unreasonable, frivolous or vexatious or a party has acted in bad faith….
In the Rules of Procedure, the Tribunal has created a comprehensive code in Rule 28, animating the discretionary authority to award costs under the SPPA. The Tribunal’s commentary associated with its Rule 28 costs authority reinforces that awarding costs under the Tribunal’s SPPA authority engages a test of “clearly unreasonable” conduct by a party.
The Present Circumstances
In the Tribunal’s Reasons for Decision dismissing the appeal, it concluded that the issues raised by the appellant were not issues about the quality of construction but were issues about the design of the drainage works. The Tribunal found that the appellant provided no reliable evidence of any quality of construction issue.
In the Township’s costs submissions, it disclosed that as early as November 14, 2018 it had communicated with the appellant that its appeal was not raising quality of construction issues, provided the appellant with a copy of section 64 of the Act and gave the appellant fair warning that if it continued with the appeal, the Township might claim costs.
Between November 14, 2018 and November 26, 2018 there ensued settlement negotiations between the appellant and respondent that culminated in an offer made by the respondent Township that the appellant accepted. That settlement was concluded in e-mail exchanges between the counsel for the respondent and Jammie Underhill, the President of the appellant. The settlement was predicated on the Township paying to make three missed lateral drain connections (“one overflow pipe from the pond, and two 8” field tile drains”). The next morning, November 27, 2018, Chad Underhill, the Vice-President of the appellant sent an e-mail to counsel for the respondent Township rescinding the settlement.
Another factor in these present circumstances is that the appellant had originally been represented by legal counsel, but at some early point in the process became self-represented.
Given that the appellant had access to its own legal advice, and given that the appellant had access to experienced drainage construction advice from the drainage contractor it hired to do private drainage work, and given that the respondent Township educated the appellant that its appeal did not raise quality of construction issues, the Tribunal concludes that the appellant knew the frailties of its section 64 appeal but continued nevertheless, using the appeal process and potential associated costs as a negotiating tactic to get the Township to fund some or all of its private drainage works of approximately $25,000.
That conclusion about the appellant’s negotiating strategy is revealed through the series of e-mail exchanges between November 14, 2018 and November 27, 2018 filed as part of the respondent Township’s written costs submissions. The appellant’s written costs submissions do not object to or dispute the truth of the contents of those e-mail exchanges.
Entitlement to Costs
Not every proceeding before the Tribunal warrants a cost award. Cost awards are discretionary, and the Tribunal remains mindful that the unique facts of each case inform how the Tribunal exercises that discretion.
In these present circumstances, the Tribunal is satisfied that the respondent Township should have a cost award because:
The appellant did not appeal under section 48 about the costs versus benefits of the drainage works, the design of the drainage works, or the compensation and allowances provided for in the Engineer’s Report.
The appellant did not appeal under section 52 to the Court of Revision about the assessments in the Engineer’s Report. The appellant did not appeal under section 54 to the Tribunal about the assessments in the Engineer’s Report.
The appellant produced no evidence to support his assertion that the drain was not constructed at the right elevation.
The appellant did not produce a drainage plan showing the drainage work it did that resulted in an invoice of approximately $25,000.
The appellant provided no satisfactory explanation or any evidence about why the private drain work it did used pipe lengths three times the length of the Ellis Branch “A” Drain 2017.
The “as built” drawings filed by J.M. Spriet, P. Eng. (the “Engineer”), confirmed that the Ellis Branch “A” Drain 2017 was constructed, materially, under the design set out in the Engineer’s Report.
The uncontradicted and unchallenged expert evidence of the Engineer was that the Ellis Branch “A” Drain 2017 was constructed under the design set out in the Engineer’s Report.
The appellant did not explain why it accepted the respondent Township’s offer and then reneged on that settlement.
The settlement negotiations were raised as the principle focus of the respondent Township’s written cost submissions. Absent any explanation from the appellant for that conduct, it is clear to the Tribunal that the appellant’s conduct to resile from the settlement was unreasonable.
Had the appellant not reneged on the settlement made between its President and counsel for the respondent Township, none of the appeal hearing costs would have been incurred.
Quantum of Costs
The respondent Township seeks reimbursement of costs on a full indemnity basis. The amount sought is $7,264.24 comprising $4,889.38 in legal fees, disbursements and associated taxes plus $2,374.86 in engineering service fees, disbursements and associated taxes.
The Tribunal has reviewed the time entries associated with both the legal cost invoice and the engineering cost invoice and find them to be reasonable in these circumstances.
Had the appellant stuck to the settlement bargain it made on November 26, 2018, the respondent Township would have absorbed its legal costs incurred to that point, which based on the invoice from its lawyer, appear to have been around $1,275.50 plus the associated tax.
The appellant’s unreasonable conduct in resiling from the settlement was the primary factor in the respondent Township having to pay for its legal counsel and its engineer to prepare for and attend at the November 29, 2018 hearing.
Therefore, in these circumstances, the Tribunal concludes the appropriate quantum for costs is all the legal time beginning on November 28, 2018 plus all legal disbursements and the associated taxes and all the engineering services, disbursements and associated taxes.
Legal fees assessed: $2,881.00 H.S.T.: $ 374.53 Legal disbursements: $ 170.38 H.S.T.: $ 22.15 Engineering fees assessed: $1,914.00 Engineering disbursements: $ 187.65 H.S.T.: $ 273.21 Total: $5,822.89
Order of the Tribunal
Based on the findings and analysis, the Tribunal orders:
The Tribunal orders that the appeal costs are fixed at $5,822.89.
The Tribunal orders that the Township of Malahide shall recover the appeal costs of $5,822.89 from Can-Am Pepper Company Ltd.
The Tribunal Orders that the Township of Malahide is free to enter the cost awarded on the tax roll immediately against any land owned by Can-Am Pepper Company Ltd. assessed under the drain.
The Tribunal Orders that under section 61 of the Drainage Act, the cost award against Can-Am Pepper Company Ltd. shall have priority lien status against any land owned by Can-Am Pepper Company Ltd. assessed under the drain.
The Tribunal Orders that no other or additional costs associated with the appeal shall be charged against or to the drain account.
Dated at Collingwood, Ontario this 7th day of January, 2019.