2013 ONSC 5323
DIVISIONAL COURT FILE NO.: DV-938-13
DATE: 2013-08-20
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
Pointes Protection Association
Applicant
– and –
Sault Ste. Marie Region Conservation Authority and 1704604 Ontario Ltd.
Respondents
Helen Scott, for the Applicant
Gordon Acton, for 1704604 Ontario Ltd.
HEARD: August 9, 2013 in Sudbury, ON
ENDORSEMENT ON SECURITY FOR COSTS
Del Frate J.:
[1] 1704604 Ontario Ltd., hereinafter “the developer”, seeks an order requiring the applicant, Pointes Protection Association, hereinafter “PPA”, to provide security for costs in the application for judicial review of a decision by the Sault Ste. Marie Region Conservation Authority on December 13, 2012. That decision granted the application of the developer pursuant to Regulation 176/06 of the Conservation Authorities Act, R.S.O. 1990, c. C. 27, as amended.
Background
[2] The developer is the beneficial owner of certain lands situated at Pointe aux Pins in Sault Ste. Marie and on which it sought permission to develop a 91 lot residential subdivision. The original application to the Conservation Authority was made on February 28, 2007. That application was denied on June 15, 2010. On December 13, 2012, the Conservation Authority approved the application with new information. The developer had appealed to the Mining and Lands Commissioner; however, with the Conservation Authority granting approval in December 2012, that appeal became moot.
[3] PPA issued a notice of application for judicial review of that decision on March 19, 2013. On consent, on April 25, 2013, the developer was added as a party respondent to the application.
[4] PPA was originally formed by residents working together on issues of local concerns. It was its intention to identify and monitor the animals living in and around the Point Louise Wetland and to monitor the pollution in the same area. PPA was formally incorporated as a non-profit corporation without share capital on March 28, 2008. Its members felt that by incorporating as a non-profit corporation, the organization would have better coordination and credibility with the community and with the developer.
[5] The existing subdivision has 115 eligible properties and as of the date of this hearing, 27 members of the eligible properties are members of the PPA. Although the PPA files income tax returns as a corporation, these returns do not reflect any income. All money comes from membership fees and voluntary donations. As of July 30, 2013, the PPA had a balance of $3,317.97 and outstanding receivables of $2,250. The PPA had outstanding accounts payable of approximately $6,500. The president of the PPA believes that they may be able to raise an additional $25,000 in the coming months. That amount would be used to fund its own legal fees. The corporation does not have any ownership of land either in this subdivision or within the district of Algoma or Ontario.
[6] When the residents became aware of the developer's intention to develop 91 estate lots in the residential subdivision around the Point Louise Wetland, they became actively involved in the approval process. They attended the meetings, reviewed the technical studies commissioned by the developer, conducted their own independent research and reviewed the law and environmental impact of this proposal.
[7] Following the rejection of the proposed development, they continued in their efforts of monitoring the wetlands and improving the environment. When the developer's project was again presented to the Conservation Authority for review, the PPA marshalled its resources and attended the hearing, though its members were not permitted to speak.
[8] Following the December 13, 2012 decision, the PPA concluded that the Conservation Authority did not have the legal authority to permit such a development, which in its belief would result in the destruction of the 46 hectares of the wetlands. It also concluded that the expert reports filed in the applications were deficient so that the Conservation Authority could not have made an informed decision on the detrimental impact of permitting such a development in these sensitive areas.
[9] After a discussion with some of the residents, a decision was made to seek judicial review. In the interim, on July 15, 2013, the Sault Ste. Marie city council voted 7-4 against permitting this development. That decision is being appealed to the Ontario Municipal Board (“OMB”).
[10] It is anticipated that the judicial review hearing is to take place in October 2013. It is also anticipated that the developer’s legal costs for defending this application is in the range of $65,000. Hence, this motion.
Position of the Developer
[11] The developer submits security for costs is necessary in view of the financial state of the PPA. It submits that this will be a very expensive action to defend and in the event that the PPA is not successful, the developer will have no recourse to a portion of its costs. By incorporating, the members of the corporation have shielded themselves personally from any costs awards made in this proceeding or in future proceedings. Since the corporation has no assets, no costs can be recovered. The litigation can continue indefinitely provided its own legal fees are paid with no fear of any consequences to the members personally.
[12] The developer proposes that the PPA marshal its resources for the OMB hearing and thus alleviate duplicity of proceedings.
Position of PPA
[13] PPA submits that the order should not be granted since this issue involves the public interest as well as a novel point of law since there are no decisions on the judicial review of rulings by the Conservation Authority. PPA is not proceeding on any selfish motivation but merely wants to hold the public authority accountable. It is acting for the benefit of society in that its actions may prevent the destruction of the environment in this particular wetland. Accordingly, it should be considered a public interest litigant.
[14] PPA further submits that having to provide a security at this stage would effectively terminate the litigation since it does not have the financial means to proceed. This would mean that this particular group would not have access to justice especially when issues as important as these cannot be pursued due to a lack of funding.
[15] Lastly, PPA submits that the developer is an intervener and that usually costs are not awarded to interveners.
The Law
[16] Rule of 56.01(1)(d) of the Rule of Civil Procedure, R.R.O. 1990, Reg. 194, provides that a court may order security for costs where:
The plaintiff or applicant is a corporation or a nominal plaintiff or applicant, and there is good reason to believe that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent.
[17] In arriving at its conclusion, the court must follow a two-step process. Firstly, the onus is on the moving party to prove that there is good reason to believe that the corporation has insufficient assets in Ontario so that costs cannot be paid. Secondly, once that has been demonstrated, the onus shifts to the respondent to either prove that it is impecunious or else it has sufficient assets to satisfy any costs awards: see Websports Technologies Inc. v. Cryptologic Inc., [2003] O.J. No. 5455, [2004] O.T.C. 19.
[18] I am grateful to counsel for the authorities provided to me in the resolution of this motion.
Discussion
[19] Firstly, I reject the submission that the developer is an intervener. On April 23, 2013, Koke J. added the developer as a party respondent to this application with the consent of PPA. Accordingly, that submission must fail.
[20] It is clear that PPA would not be capable of responding to any costs awards in view of its financial situation. The issue is whether PPA can be considered a “public interest litigator” which could preclude an order for costs if PPA is not successful.
[21] Although there are situations where certain public interest litigators may be shielded from costs, this is not one of them.
[22] The motives of the members of the PPA may be altruistic; however the issues involved in this litigation relate to the interests of only a minority of the residents of this subdivision. Of some 115 eligible members, only 27 members are part of this corporation. The vast majority of the residents have not expressed an interest in the proceedings and one can infer that they are satisfied with the development proceeding. This is especially true considering the amount of publicity that this particular project has entertained in that community. The minority has been very vocal and active in objecting to this project. They have accessed the Conservation Authority, have attended council meetings and have involved the media.
[23] This development does not have any impact on the corporate litigant but may have some impact on the members of the PPA. Accordingly, the named party does not have any personal, proprietary or pecuniary interest in the outcome of this litigation. Obviously, the impact of this development will be felt by the members of the PPA.
[24] The project involves a localized area of Sault Ste. Marie and will not have repercussions for the general public. Its opposition appears to reflect a NIMBY “Not in My Backyard” attitude. The members seem to want to protect the neighborhood even though the great majority of the neighbourhood has shown no interest in opposing the project. From its incorporation in 2008, the PPA has been able to garner only 27 members.
[25] The submission that this is a precedent-setting case is an interesting one, however it adds very little to the issues even though I have to consider the merits of the case to some extent. It is not up to me to determine that issue.
[26] I agree that the developer appears to have a greater capacity to bear the cost of this litigation. However, this does not mean that in every situation where one of the parties is in a better financial position, that party should not be entitled to costs. If that were the case, our courts would be even more congested than they are currently. There must be some deterrent in any type of litigation. Parties should seriously consider the consequences of engaging in any litigation especially one that can be as complicated, protracted, and expensive as this one.
[27] If its members are that convinced of their position, then they should proceed as any other litigant and be exposed to costs if not successful.
[28] The developer has submitted a projected bill of costs of approximately $65,000. That amount is on a total indemnity basis. It is not likely that total indemnity would be awarded in this situation if successful. Even on a partial indemnity basis, one might expect a range of between $30,000 and $40,000 in costs.
[29] In assessing costs, the principles in Boucher v. Public Accountants Council, 2004 14579 (ON CA), 71 O.R. (3d) 291, (C.A.), [2004] O.J. No. 2634, must be considered. The overriding consideration is fairness and ability to pay. Considering the limited financial resources of the PPA, the sum of $20,000 ought to be pledged as security for costs, within 15 days.
[30] Should the parties not agree on costs for this motion, written submissions with replies will be accepted within 30 days. These submissions are not to exceed four pages.
[31] Order to issue as per reasons.
Mr. Justice Robert G.S. Del Frate
Released: August 20, 2013
2013 ONSC 5323
DIVISIONAL COURT FILE NO.: DV-938-13
DATE: 2013-08-20
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
Pointes Protection Association
Applicant
– and –
Sault Ste. Marie Region Conservation Authority and 1704604 Ontario Ltd.
Respondents
ENDORSEMENT ON SECURITY FOR COSTS
Del Frate J.
Released: August 20, 2013