DIVISIONAL COURT FILE NO.: 217/02
DATE: 20030501
SUPERIOR COURT OF JUSTICE – ONTARIO
(DIVISIONAL COURT)
RE: GRATTON-MASUY ENVIRONMENTAL TECHNOLOGIES INC. (d.b.a. ECOFLO ONTARIO) and WATERLOO BIOFILTER SYSTEMS INC., v. BUILDING MATERIALS EVALUATION COMMISSION
BEFORE: Mr. Justice Dennis Lane
Madam Justice Joan L. Lax
Mr. Justice Denis J. Power
COUNSEL: K. Scott McLean and Y. Monica Song, for the Applicants
Leslie McIntosh and Troy Harrison, for the Ministry of the Attorney General
SUPPLEMENTARY ENDORSEMENT ON COSTS
[1] The Applicants were substantially successful on this judicial review application to set aside and declare null and void a decision of The Building Materials Evaluation Commission made on February 28, 2002. The court quashed the aforesaid decision and remitted the matter to the BMEC for a re-hearing on proper notice and disclosure.
[2] The Applicants subsequently delivered a Bill of Costs, prepared on the substantial indemnity scale, claiming $124,667.93. This court then ordered that the costs be paid by the Respondent to the Applicants on the partial indemnity scale.
[3] In the court’s Endorsement on Costs, dated January 13, 2003, it said:
[4] The remaining issue to be determined is the quantum of costs. In this regard, we wish to draw the parties’ attention to the recent decision in Zesta Engineering Ltd .v. Cloutier, Ontario Court of Appeal, (Unreported), November 27, 2002. There, the Court stated at paragraph 4:
“In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant.”
[5] If the quantum of costs cannot be agreed, the applicants are to deliver within ten days, an amended Bill of Costs and supporting material that will permit us to fix costs on a partial indemnity scale. The respondent is to deliver its written submissions ten days thereafter. There are to be no reply submissions without leave.
(Now reported as 2002 45084 (ON CA), [2002] O.J. No. 3738).
[4] On February 13, 2003, counsel for the Applicants sought leave to file reply submissions. In his letter, he said:
Having reviewed the Respondent’s submissions, it is our intention to seek leave of the Court to make brief and focused submissions with respect to the issue raised at paragraphs 5 and 7 of the Respondent’s submissions. The Respondent states that the attendances on March 15 and 25, 2002 in relation to our application for judicial review were “entirely unnecessary and resulted solely from the unreasonable conduct of the Applicants in refusing to grant routine adjournments”, that notwithstanding the Court’s Endorsement, we should not be awarded costs for these attendances, and that headings B through H of schedule “A” to our Costs Submissions dated January 28, 2003, should effectively be struck out. We wish to seek leave to respond to the submissions alone.
Counsel were advised by Lane J. on March 24, 2003, that the panel had agreed to receive reply submissions.
[5] All submissions have now been received and considered.
[6] This application was initially brought on in Ottawa on March 15, 2002. The Applicants sought leave to have the application heard on an urgent basis before a single judge. The Respondent, however, requested a brief adjournment to March 25, 2002, to allow time to review the materials, prepare responding materials, and conduct cross-examinations. Counsel for the Respondent advised counsel for the Applicants that a full panel of the Divisional Court was available in Toronto to hear the application on April 18, 2002. The request for an adjournment was initially refused and, accordingly, counsel for the Respondent was required to travel to Ottawa to formerly request the court to grant an adjournment. Counsel for the Applicants reside in Ottawa.
[7] On March 15, 2002, counsel agreed to the adjournment in order to permit the preparation of responding materials and cross-examinations. However, counsel for the Applicants was not prepared to adjourn the application to April 18, 2002 to be heard by a full panel of the court. The matter was adjourned, on consent, by Forget J., to March 25, 2002, at Ottawa.
[8] Cross-examinations were conducted by counsel for the Respondent on March 20, 2002.
[9] The application came on for hearing on March 25, 2002, this time before Morin J. At that time, counsel for the Respondent again sought to have the hearing adjourned to a full panel of the court on April 18th. After some discussion and argument, counsel agreed to adjourn the matter to April 18th subject to certain terms being stipulated by Morin J. On consent, the issue of costs of the appearances before Forget J. and Morin J. were reserved to the panel that would hear the application.
[10] Prior to the hearing, which, indeed, proceeded on April 18 and 19, 2002, counsel for the Applicants conducted a cross-examination.
[11] As aforesaid, the Respondent submits that, in these circumstances, no costs should be awarded with respect to the proceedings on March 15 and 25, 2002. She argues that the appearances were unnecessary and resulted from the unreasonable conduct of the Applicants. The Applicants submit that these proceedings were, in fact, necessary.
[12] In their reply submissions, the Applicants make the following comments:
Routine adjournments were hardly the sole issue before the Court in the interim proceedings. From the perspective of the Applicants, the issue of paramount importance that was at stake in these interim proceedings was the preservation of their rights pending their challenge to the Respondent’s amendment of their Authorizations. The safeguard measures sought by the Applicants were first, notice of the application for judicial review on the Respondent’s website and in any other publication relating to the Authorizations, and second, a stay of execution of the Respondent’s decision pending the hearing of the application.
Prior to March 15, 2002, the Applicants attempted to engage the Respondent in discussions regarding the provision of notice of their application for judicial review and a stay of execution in the interim period. The Applicants were prepared to achieve a consent adjournment on terms that would preserve their rights but these attempts were consistently turned down or ignored by the Respondent and its counsel on the basis of a policy of not entertaining such requests.
Since the Applicants were challenging the validity of the Commission’s decision to amend the Authorizations, the interim proceedings were entirely necessary in order to preserve the status quo. It was only upon attendance before Mr. Justice Forget on March 15, 2002 that the Respondent consented to providing notice of the application for judicial review on its website and in any other publication relating to the Authorizations. On March 25, 2002, Mr. Justice Morin granted a full stay of execution of the Commission’s decision pending a hearing before the Divisional Court. Upon hearing the application and pending a final decision on the merits, this Honourable Court extended the effect of the measures adopted by the Superior Court in the interim proceedings.
[13] These reply submissions throw additional light on the matter. We are satisfied, based on the foregoing, that the Applicants are, as the successful parties, entitled to be compensated for the work and disbursements associated with the Ottawa appearances.
[14] The Respondent also challenges the claim for costs relevant to the proceedings before BMEC on the grounds that the court has no jurisdiction to award any costs relevant to proceedings before an administrative tribunal. We agree. (See Rathe v. Ontario (Health Professions Appeal and Review Board), [2002] O.J. No. 4787).
[15] The Respondent calculates that these services before BMEC represent an amount of $27,000.00 and asks that the entire amount be disallowed. The Respondent’s calculations appear to be substantially correct. Therefore, all of the hours claimed as expended on behalf of the clients in 2000, 2001, and up to the time when the law firm began working on the judicial review application, should be deleted. Simply put, these hours do not fall within the services listed in paragraph 1 of the Costs Grid.
[16] The Applicants make the following arguments in paragraph 3 of their Submissions:
Part II - PRINCIPLES
- In the endorsement of the Court dated January 13, 2003, counsel are referred to the recent decision of Zesta Engineering Ltd. V. Cloutier, Ontario Court of Appeal, (Unreported), November 27, 2002. The applicants appreciate the assistance which this decision provides. At the same time, it is respectfully submitted that there is nothing in the Reasons of the Court of Appeal that either derogates from or intends to limit the guidelines in the applicable Rules. It is, in our submissions, more a question of applying a combination of factors, and the proposition in Zesta is one of them.
We disagree. The Zesta decision is not simply one of the factors to be considered along with a combination of factors. It is more than that. The case stands for the proposition that the award must reflect “more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant.” This is a fundamental concept in fixing or assessing costs.
[17] The amount at which costs are to be fixed is not simply an arithmetic function dependent on the number of hours worked and the hourly rates employed but, rather, the party paying the costs should be subjected to an order which is fair and predictable. In other words, the party required to pay costs must not be faced with an award that does not reasonably reflect the amount of time and effort that was warranted by the proceedings. This court accepts as valid the following excerpt from the decision of Wright J. in Lac Des Mille Lacs First Nation v. Canada (Attorney General) (Sep. 12, 2002), (S.C.J.) as follows:
[12] As salutary as it may be to keep judges up to date on the actual costs of litigation, one must never forget that in determining costs as between party and party one is not pronouncing upon the legitimacy of fees charged by solicitors to their clients, one is simply determining what, in the circumstances of a particular trial, application or motion, an unsuccessful party should be ordered to contribute towards the costs of the successful party. While the actual costs incurred by the successful party may be a factor to be consider [sic, considered], a factor which does not appear to be enunciated in Rule 57.01 (1), it is not a governing factor.
[18] We also adopt the following words of Campbell J. in Jhaj v.York University, [2002] O.J. No. 128 (S.C.J) at para. 19:
In my view, the awarding of costs, particularly on a motion, should reflect some basis of continuity between similar kinds of motions and not be determined only on the basis of the number of hours involved.
[19] Paragraph 6 of the aforesaid Submissions reads as follows:
PART III - SUBMISSIONS
- Attached hereto at Schedule “A” is the Bill of Costs, prepared on a partial indemnity scale. Earlier, in response to a request of the Court, counsel delivered a draft Bill of Costs prepared on a substantial indemnity scale. The applicable Tariff as directed has now been applied to the latter, however, due to the nature of the Tariff, the differential, which is driven by the allowably [sic,allowable] hourly rate, is not great.
As aforesaid, we do not accept the proposition that the calculation of costs on either the partial or substantial indemnity cases should be “…driven by the allowably [sic, allowable] hourly rate…” There are many other relevant factors requiring consideration (see the foregoing comments and Rule 57.01). This court notes that, in any event, the maximum or “up to” hourly rates allowable under the partial indemnity scale are approximately 75% of those under the substantial indemnity scale.
[20] We observe that the proceedings before this court were of importance to the businesses of the Applicants and, as well, BMEC. The issues before the court involved fairly important legal questions. The issues were somewhat complex and warranted the involvement of senior counsel with the assistance of a junior counsel. We note also that the application involved a matter of first impression. The Respondent submits that there is nothing unique about this case “requiring the Court to deviate from the norm and that costs of $25,0000 proposed by the Respondents would be on the high side of the continuum of costs awarded in judicial review applications.”
[21] The Applicants claim costs on the partial indemnity scale in the total amount of $113,017.43 which, it will be noted, is approximately $11,600 less than the previous claim of $124,667.93 made on the substantial indemnity scale.
[22] The Applicants’ claim is broken down as follows:
(a) Preliminary work in connection with the
preparation of the Notice of Application
(this includes the work performed in connection
with the proceedings before BMEC) $ 44,106.50
(b) Factum and Book of Authorities in
connection with the hearing scheduled for
March 15, 2002 $ 9,792.00
(c) Preparation for the March 15th hearing $ 3,580.00
(d) Counsel fee at the March 15th hearing $ 2,142.50
(e) Cross-examination of P. Masuy $ 10,673.50
(f) Supplementary Factum/Book of Authorities $ 462.00
(g) Preparation for the March 25th hearing $ 4,999.00
(h) Counsel fee at the March 25th hearing $ 2,587.50
(i) Factum and Book of Authorities for the
April 18th and 19th hearing $ 1,299.50
(j) Preparation for the April hearing $ 10,684.00
(k) Counsel fee for the appearance on April 18th
and 19th $ 5,600.00
(l) Obtaining Order $ 1,651.50
(m) Submissions on Costs $ 7,737.50
(n) Preparation of Bill of Costs $ 520.00
Sub-Total $105,835.50
(o) Disbursements (inclusive of GST where applicable) $ 7,181.93
Total Fees and Disbursements $113,017.43
[23] Senior counsel was called to the Bar in 1977. His hours, depending on when they were rendered, are claimed at the rates of $310, $320 and $350. Junior counsel was called to the Bar in 1998. Her hours are claimed at $205 and $225 respectively. Student and clerical hours are claimed at $60 and $80 respectively. It will be observed that “fees other than counsel fee” have been claimed at the maximum or “up to” amounts allowed under the partial indemnity scale of the Costs Grid.
[24] This court notes that, even before attempting to conduct a detailed analysis of the Applicants’ Bill of Costs, the amount claimed is excessive and greatly exceeds what this court views as fair and reasonable. The unsuccessful party cannot be expected to pay anything near the amount claimed, nor should it have anticipated when the Application was commenced that, if unsuccessful, it would be faced with a claim for costs anywhere near the amount now being sought by the Applicants.
[25] Analysis:
(a) Obviously, the aforesaid amount of $27,000 for the services performed before the Commission should be deducted;
(b) The hourly rates claimed for senior and junior counsel are too high. The “up to” or maximum hourly rates, and the counsel fees set out in the Costs Grid, are not intended as an every day standard. The court accepts Killeen J.’s comment made in Pagnotta v. Brown, [2002] O.J. No. 3033 where he said that the upper limit is “rather, meant to be an upper standard for the most complicated of cases with the most experienced of counsel appearing.” The court also adopts Lane J.’s comment in TransCanada Pipelines v. Potter Station Power Limited Partnership, [2002] O.J. No. 1638 where he said:
[8] … This raises the question of what is the practical effect of the phrase “up to”. What are the considerations to be applied? Rule 57.01 (1) remains unchanged by the recent amendments introducing the costs grid and the new nomenclature. It provides that the court may consider a list of factors including offers, the result, complexity, the importance of the issues, conduct of the parties and any other relevant matter. I regard “up to” as a direction to consider these aspects of the case in determining not only who is to pay or receive costs, but also how much is appropriate. Counsel’s hourly or daily rate should reflect not only his or her seniority at the bar, but also the relevant aspects of the matter itself. On this approach, maximum rates should be reserved for maximum cases.
[9] I do not accept the view that the hourly rate is to be arithmetically prorated according to the actual years of experience within each class of experience in the grid. Some attention may be paid to that factor, but it is not an arithmetic exercise.
This court also notes with approval the following comments of Brockenshire J. in Sutor v. Ontario (Workplace Safety and Insurance Board, May 7, 2002:
The intention, as I understand it, was that the top rate was to be preserved for the exceptional lawyer, who did an exceptional job in a complicated and difficult case. The new tariff does not contain discretion to go above the amounts set out as maximums and so such exceptional situations have to be accommodated within the tariff limits. That in turn means that the unexceptional situation would call for rates much lower than the maximum provided.
In this matter, we find that the appropriate hourly rates for fees other than counsel fee for senior and junior counsel are $250 and $150 respectively.
(c) The counsel fees for the Ottawa proceedings (for both counsel) should be fixed at $1,000 for each day. ($2,000.00)
(d) The counsel fee on the hearing of the Application in April should be fixed at $1,750 per day. ($3,500.00)
(e) The hours expended on the preparation of Factums and Appeal Books are clearly excessive. The Applicants claim $11,553. The court notes that there appears to be considerable duplication of effort. For instance, for the March 15th hearing, 30 hours are recorded for junior counsel, 39.5 hours for the student and 4.9 hours for the clerk. Something in the range of $5,000 would be more appropriate.
(f) For the cross-examination of witnesses, the Applicants claim 9.3 hours for senior counsel, 26.5 hours for junior counsel and 18.2 hours for the clerk. The amounts claimed for junior counsel and the clerk are excessive and cannot be passed on to an unsuccessful party.
(g) As aforesaid, $7,737.50 is claimed for the submissions on costs. Again, this is excessive. Bearing in mind that the costs claim advanced by the Applicants is excessive overall, this entire amount should be disallowed.
(h) The court accepts the claim for disbursements.
Conclusion:
[26] As noted earlier in these reasons, this court cannot, and should not, attempt to fix the costs of these proceedings pursuant to a simple arithmetical calculation or approach. Accordingly, in light of the principles set out above, the court exercises its discretion and fixes the costs of these proceedings at $13,000 for fees other than counsel fee; $5,500 for counsel fees; and $7,181.93 for disbursements or, $25,681.93 in total.
[27] Interest on the aforesaid sum of $25,681.93 should commence to accumulate as of the date of release of this Supplementary Endorsement on Costs.
[28] Order accordingly.
Lane J.
Dated at Toronto, April 30, 2003
Lax J.
Dated at Toronto, April 30, 2003
Power J.
Dated at Ottawa, April 30, 2003
Released: