Ministry of Natural Resources v. 555816 Ontario Inc. (c.o.b. Campbellville Sand & Gravel Supply); Regional Municipality of Halton, Added Party Regional Municipality of Halton v. 555816 Ontario Inc. (c.o.b. Campbellville Sand & Gravel Supply) et al. [Indexed as: Ontario (Ministry of Natural Resources) v. 555816 Ontario Inc.]
94 O.R. (3d) 344
Ontario Superior Court of Justice,
Divisional Court,
Ferrier, Lederman and Aston JJ.
January 21, 2009
Boards and Tribunals -- Powers -- Ontario Municipal Board -- Ontario Municipal Board not having power to grant costs premium. [page345]
The appellants appealed an order of the Ontario Municipal Board granting a costs premium to the respondent.
Held, the appeal should be allowed.
In granting a costs premium based on the outstanding result achieved and the financial risk to counsel for the respondent, the Board relied on a decision of the Ontario Court of Appeal which was subsequently overruled by the Supreme Court of Canada. While that case dealt with s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 and rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, there are significant parallels between the court system of costs and the Ontario Municipal Board Act, R.S.O. 1990, c. O.28 and the Board's own Rules 99, 105 and 106. The Board's Rules focus on the conduct of a party against whom an award of costs is sought not the result achieved by the party seeking costs or the risk assumed by counsel. The Board has no authority to award a costs premium.
APPEAL from the order of the Ontario Municipal Board granting a costs premium to respondent.
Cases referred to Walker v. Ritchie, [2006] 2 S.C.R. 428, [2006] S.C.J. No. 45, 2006 SCC 45, 273 D.L.R. (4th) 240, 353 N.R. 265, J.E. 2006-1997, 217 O.A.C. 374, 43 C.C.L.I. (4th) 161, 43 C.C.L.T. (3d) 1, 33 C.P.C. (6th) 1, 151 A.C.W.S. (3d) 23, EYB 2006-110276, apld Walker v. Ritchie, 2005 13776 (ON CA), [2005] O.J. No. 1600, 197 O.A.C. 81, 25 C.C.L.I. (4th) 60, 31 C.C.L.T. (3d) 205, 12 C.P.C. (6th) 51, 138 A.C.W.S. (3d) 1156 (C.A.), consd Other cases referred to 555816 Ontario Inc. (c.o.b. Campbelville Sand & Gravel Supply) v. Halton (Region); 555816 Ontario Inc., Re, [2006] O.M.B.D. No. 1152, 33 M.P.L.R. (4th) 271 (Munic. Bd.); Authorson (Litigation Administrator of) v. Canada (Attorney General), [2006] O.J. No. 5179, 57 C.C.P.B. 270, 37 C.P.C. (6th) 115, 154 A.C.W.S. (3d) 35 (S.C.J.); Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190, [2008] S.C.J. No. 9, 2008 SCC 9, 329 N.B.R. (2d) 1, 64 C.C.E.L. (3d) 1, 164 A.C.W.S. (3d) 727, EYB 2008-130674, J.E. 2008-547, [2008] CLLC Â220-020, 170 L.A.C. (4th) 1, 372 N.R. 1, 69 Imm. L.R. (3d) 1, 291 D.L.R. (4th) 577, 69 Admin. L.R. (4th) 1, 95 L.C.R. 65; Manufacturers Life Insurance Co. v. Ward, [2007] O.J. No. 4882, 2007 ONCA 881, 162 A.C.W.S. (3d) 867, 235 O.A.C. 325, 37 B.L.R. (4th) 26, 37 E.T.R. (3d) 1, 288 D.L.R. (4th) 733, 56 C.C.L.I. (4th) 2 Statutes referred to Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131 [as am.] Ontario Municipal Board Act, R.S.O. 1990, c. O.28, s. 97(1) Rules and regulations referred to Ontario Municipal Board, Rules of Practice and Procedure, Rules 99, 105, 106 Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 57.01(1) [as am.]
Ronald E. Carr, for appellant Ministry of Natural Resources. Roger T. Beaman, for appellant Regional Municipality of Halton. Claudio R. Aiello, for respondent 555816 Ontario Inc. (c.o.b. as Campbellville Sand & Gravel Supply). [page346]
The judgment of the court was delivered by
LEDERMAN J: -- Nature of Proceeding
[1] The Ministry of Natural Resources ("MNR") and the Regional Municipality of Halton ("Halton") appeal from the order of the Ontario Municipal Board (the "Board") granting a costs premium in the amount of $60,000 to the respondent, Campbellville Sand & Gravel Supply (the "Licensee"). The order arose out of a hearing on the merits of the most appropriate method of rehabilitation of a gravel pit over which the respondent held a licence and a proposed amendment of the site plan as requested by the MNR. The Board rejected the proposed amendment and granted costs in favour of the Licensee on a full indemnity basis which costs were fixed at $604,956.46. The Board also awarded a premium in the amount of $60,000 for total costs of $664,956.46. The MNR was ordered to pay 75 per cent of the costs and Halton 25 per cent.
[2] Leave to appeal various issues was sought both with respect to the finding on the merits and the award of costs. Leave to appeal was granted by Swinton J. [2007 20785 (ON SCDC), [2007] O.J. No. 2209, 225 O.A.C. 78 (Div. Ct.)] on the matter of the premium only. Standard of Review
[3] An appeal lies from the Board to the Divisional Court with leave, on a question of law.
[4] Counsel for all parties agree that the standard of review as to whether the Board has jurisdiction to award a premium is correctness. Given that the nature of the question of law in issue is of importance to the legal system in general and outside the specialized area of expertise of the Board, we agree (Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, [2008] S.C.J. No. 9).
[5] If there is jurisdiction to award a premium, the standard of review of the Board's decision to award $60,000 as a premium is reasonableness. The Board's Award of a Premium
[6] This was the first occasion that the Board has awarded a premium. While the Board member observed that the Rules of the Board were silent on this issue, she was of the view that she had the discretion under s. 97(1) of the Ontario Municipal Board Act, R.S.O. 1990, c. O.28 (the "OMB Act") and ordered a premium. In doing so, she relied on the Court of Appeal decision in Walker v. Ritchie, 2005 13776 (ON CA), [2005] O.J. No. 1600, 197 O.A.C. 81 (C.A.), which was [page347] subsequently overturned by the Supreme Court of Canada (2006 SCC 45, [2006] 2 S.C.R. 428, [2006] S.C.J. No. 45).
[7] The Board member acknowledged that the approach to costs is quite different as between the Board and the courts. She pointed out that before the courts, matters generally involve a dispute between parties and there is generally very little or no consideration of the public interest. In addition, matters in the courts often have a monetary basis and costs are routinely awarded based on success. The Board, on the other hand, generally deals with matters of broad public interest rather than with questions involving the private interest of the parties. The Board rarely deals with matters which are founded simply on money and, in Board proceedings, costs do not routinely follow the result.
[8] However, with respect to the question of a premium, the Board member adhered to the analysis set out by the courts with respect to costs under the court regime.
[9] At p. 9 of the decision, the Board [[2006] O.M.B.D. No. 1152, 33 M.P.L.R. (4th) 271 (Munic. Bd.), at para. 36] member stated:
In this case, the Board finds that the circumstances of this case fall full square within the tests set down by the court for the award of a premium. (Emphasis added)
[10] And at p. 25, the Board member stated [at para. 98]:
The Board finds that in the exercise of its discretion to award costs, it may consider whether a claim for a premium meets the tests set down by the courts in respect to the award of such a cost and may award a premium where the circumstances merit. (Emphasis added)
[11] The Board referred to the test articulated by the Court of Appeal in Walker v. Ritchie, supra, to the effect that, for a premium to be awarded, an outstanding result must be achieved and there has to be financial risk to the lawyer in the recovery of costs.
[12] Since the Board does not award costs based on the result alone, the Board indicated that with respect to the outstanding result branch of the test the Board must adjust this aspect of the test to meet the particular circumstances in which the Board awards costs and that the result may be viewed in the light of the conduct of the other parties.
[13] As to the financial risk to the lawyer aspect of the test, the Board held that the moment that Mr. Guerrieri, the principal of the Licensee, died, there was a substantial risk that counsel would not be paid for his fees and that it was safe to assume that given the uncertainty surrounding the operations of the company and the gravel pit sites, there was a substantial risk of delay or non-payment of some very substantial fees. [page348]
[14] It is, therefore, clear that the Board grounded its decision to award a premium on the principle stated by the Court of Appeal in Walker v. Ritchie, supra. However, that decision was overruled by the Supreme Court of Canada. The Supreme Court disallowed the premium that had been awarded by the Court of Appeal based on a risk of non-payment of fees to counsel. The Supreme Court indicated that risk of non-payment was not an enumerated factor under the then rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 relating to the award of costs and there was no other basis or authority to make such an order.
[15] The Supreme Court stated that a risk premium was a matter as between a plaintiff and his or her own client and not a matter that a defendant would have knowledge of. It held that a risk premium cannot be exacted against the unsuccessful defendant.
[16] Although there have been subsequent changes to rule 57.01(1), none of them (including an express power to award full indemnity costs) has changed the applicability of the Supreme Court of Canada's decision in Walker v. Ritchie (see Manufacturers Life Insurance Co. v. Ward, [2007] O.J. No. 4882, 2007 ONCA 881, at paras. 61-72; Authorson (Litigation Administrator of) v. Canada (Attorney General), [2006] O.J. No. 5179, 37 C.P.C. (6th) 115 (S.C.J.), at para. 10).
[17] Mr. Aiello on behalf of the respondent submitted that the Board was not, in fact, adopting the test from Walker v. Ritchie, supra, but rather the Board fashioned a test that followed the case's intent, adapted to the Board's theory of costs. However, a close reading of the decision indicates that the Board clearly relied upon what the Court of Appeal held in Walker v. Ritchie, supra. At p. 25 of its reasons, the Board stated [at para. 99]:
In general, the tests for the award of a premium on account of costs are that an outstanding result must be achieved and that there has been a risk to the lawyer in the recovery of costs. The Board then proceeded to analyze the facts in terms of whether Mr. Aiello had achieved an outstanding result and the fact that he was at substantial risk of non-payment of his fees.
[18] To the extent that the Board relied on these principles, its decision cannot stand as it is no longer good law according to the Supreme Court of Canada. OMB Act and Rules
[19] Mr. Aiello submits that the authority of the Board does not stem from the Courts of Justice Act, R.S.O. 1990, c. C.43, but rather from the OMB Act. The Board has broad discretionary [page349] powers with respect to costs pursuant to a number of sections of the OMB Act and, in particular, s. 97(1), which provides as follows:
97(1) The costs of and incidental to any proceeding before the Board, except as herein otherwise provided, shall be in the discretion of the Board, and may be fixed in any case at a sum certain or may be assessed.
[20] He submits that this is to be contrasted with s. 131 of the Courts of Justice Act, which expressly limits its broad discretion to what may be provided for by the rules of practice. Section 131 states as follows:
131(1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.
[21] As Walker v. Ritchie, supra, was based upon an interpretation of s. 131 of the Courts of Justice Act and rule 57.01(1), Mr. Aiello submits that it has no applicability to the structure of costs in OMB matters.
[22] He points out that s. 97(1) of the OMB Act does not make the broad power to award costs subject to the Board's rules.
[23] The Board has developed its own rules of practice and procedure dealing with costs. They are set out in Rules 99, 105 and 106 [Ontario Municipal Board, Rules of Practice and Procedure]. It should be noted that they focus on the conduct of a party against whom an award of costs is sought, not the result achieved by the party seeking costs or the risk assumed by counsel.
[24] There are similar parallels, however, between the court system of costs as set out in s. 131 of the Courts of Justice Act and rule 57.01(1) and the OMB Act and Rules 99, 105 and 106.
[25] Just as there is a limiting phrase in s. 131 of the Courts of Justice Act ("subject to the provisions of an Act or rules of court"), there is a similar limiting phrase in s. 97(1) of the OMB Act ("except as herein otherwise provided").
[26] Moreover, just as rule 57.01(1) does not expressly or impliedly contain the authority to award a premium, the OMB rules are silent as to such a power as well.
[27] Mr. Aiello submitted that the basis of the Walker v. Ritchie decision in the Supreme Court was that rule 57.01(1) provided enumerated grounds for the awarding of costs; and even if subrule (i) that "any other matter relevant to the question of costs" could be considered, the Supreme Court concluded that such a structure did not provide any authority for the ordering of a premium.
[28] To the same effect is the structure of the OMB Act and rules. The rules expressly provide that the conduct of a party may be the basis for an award of costs but do not set out any other ground. [page350]
[29] Therefore, even though the two regimes as to costs may have different rationale, they contain a similar statutory and rule framework in the sense that a broad discretionary power to award costs is given by statute, but must be subject to what is delineated in their respective rules. Upon a consideration and comparison of the two and on the basis of the Supreme Court of Canada decision in Walker v. Ritchie, supra, there cannot be said to be any authority in the Board to order a premium.
[30] Mr. Aiello also argued that the motivation for ordering a premium was, in fact, the conduct of the MNR and Halton and notwithstanding the Board's reliance on the Court of Appeal decision in Walker v. Ritchie, supra, the Board is able to tie the premium to its rules of practice and the conduct of those parties, namely public agencies deliberately withholding information about public safety issues.
[31] Although the Board did make reference to conduct, the thrust of its decision concerning the premium is based on the two-fold basis set out by the Court of Appeal, that is, outstanding result and substantial risk of non-payment of counsel's fees. Those factors have nothing to do with the MNR or Halton's conduct. Accordingly, it cannot be said that conduct forms the basis of the premium award. It is strictly a risk premium and nothing more. Conclusion
[32] For these reasons, the Board's award of a premium is incorrect as it has no basis in law, either under common law or statute. The appeal is, therefore, allowed and an order will go setting aside the Board order granting an award of a premium of $60,000 in favour of the Licensee.
[33] In accordance with the agreement of counsel, there will be no order as to costs of the appeals.
Appeal allowed.