CITATION: 2145850 Ontario Limited v. Student Transportation of Eastern Ontario, 2016 ONSC 758
DIVISIONAL COURT FILE NO.: 325/15 DATE: 20160418
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
SACHS, C. HORKINS AND PATTILLO JJ.
BETWEEN:
2145850 ONTARIO LIMITED o/a Highland Bus Services, BARR BUS LINES LIMITED, CLARK BUS & MARINA LIMITED, HEALEY TRANSPORTATION LIMITED, PREMIER BUS LINES INC., VALLEY BUS LINES LIMITED, and WHITTEKER BUS LINES LIMITED
Plaintiffs/Respondents
– and –
STUDENT TRANSPORTATION OF EASTERN ONTARIO and HER MAJESTY THE QUEEN as represented by the MINISTER OF EDUCATION
Defendants/Appellants
Jonathan C. Lisus and Daniel A. Schwartz, for the Plaintiffs/Respondents
Christopher T. Thompson, for the Defendant, Her Majesty the Queen in Right of Ontario
HEARD at Toronto: January 28, 2016
REASONS FOR JUDGMENT
L. A. PATTILLO J.
Introduction
[1] The Defendant, Her Majesty the Queen in right of Ontario as represented by the Minister of Education (the “Ministry”), pursuant to the order of Hackland J. dated April 30, 2015 granting leave, appeals the order of Belch J. (the “Motions Judge”) dated December 22, 2014, awarding the Plaintiffs partial indemnity costs in the amount of $150,000 (the “Cost Order”).
[2] The Cost Order was in respect of a motion to join the Ministry as a party and amend the statement of claim accordingly. It was argued before the Motions Judge on June 24 and 25, 2014.
[3] For the reasons that follow, I dismiss the appeal. Notwithstanding what at first glance appears to be a high amount for partial indemnity costs on a motion, given the context in which the motion arose, the importance of the issues on the motion and the Ministry’s approach to the motion, I do not consider that the Motions Judge was clearly wrong or made a clear error in principle in reaching the decision he did.
Overview
Background
[4] The Plaintiffs’ action (the “Action”) arises out of changes introduced by the Ministry to the way in which student transportation is procured by school boards in Ontario. In addition to the Action, there are currently four other related actions in Ontario arising from similar issues involving the procurement of student transportation in which the Ministry is involved.
[5] In 2008, the Ministry implemented changes to the procurement model for student transportation by adopting “competitive procurement”. The procurement model previously being used by various school boards or transportation consortia on their behalf was a negotiated procurement model. The Ministry decided that a Request for Proposal (“RFP”) process would be used. The Ministry subsequently developed an RFP template and a standard form contract which was to be used by all school boards or transportation consortia.
[6] From the outset of the Ministry’s initiative, concerns were raised. The Ministry embarked on three pilot projects. Following completion of the pilot projects, strong opposition arose from, among others, small rural operators. The Ministry imposed a moratorium and the Minister promised no new RFP’s until January 2010. Notwithstanding, other school boards or transportation consortia proceeded with RFP’s. As a result, local operators who were affected commenced legal actions and sought injunctions against the local school boards or transportation consortia which were either granted or agreed to by the defendants.
The Action
[7] On September 24, 2012, the defendant Student Transportation of Eastern Ontario (“STEO”) released an RFP in respect of student transportation for its member school boards (the “STEO RFP”). STEO is a transportation consortium which procures student transportation on behalf of both the Upper Canada District School Board and the Catholic District School Board of Eastern Ontario.
[8] In November 2012, the Plaintiffs, who are independent school bus operators who have been providing services to STEO, commenced the Action against STEO claiming an interim and permanent injunction restraining the closing of the STEO RFP and various declarations including that the STEO RFP breached the contracts between the plaintiffs and STEO.
[9] The Plaintiffs brought an injunction motion to stop the STEO RFP. On the day of the hearing, STEO agreed to suspend the STEO RFP. STEO then brought a rule 21 motion seeking to have the Action dismissed on the basis that Plaintiffs’ claims were untenable by reason of the Broader Public Sector Accountability Act (“BPSA”). On December 3, 2012, Justice Tranmer dismissed STEO’s motion.
[10] By order dated February 8, 2013, made on consent, the Ministry was permitted to intervene in the Action on the condition it make documentary production and produce a witness for discovery on two broad issues:
i. Allegations that the Ministry directed or influenced school boards or consortia that the RFP’s are the “approved” or “preferred” approach to the procurement methods; and
ii. Allegations that the Ministry ignored or failed to properly respond to the Task Force Report dated January 25, 2012 which was commissioned by the Ministry in mid-2011 to review methods of competitive procurement for the student transportation industry.
[11] As part of the intervention order, the Ministry was allowed to deliver a pleading. The Plaintiffs were given a right of reply and permitted to plead the two intervention issues.
[12] While numerous consortia had agreed to temporarily suspend their RFPs pending outcome of the Action, the Southwestern Ontario Student Transportation Services (“STS”) issued an RFP on January 8, 2013. The small rural operators affected sought and, after a full hearing, obtained an injunction on April 3, 2013 from Justice Nolan stopping the RFP. The Ministry subsequently moved to intervene in the STS action.
The Motion
[13] On February 25, 2014, the Plaintiffs commenced a motion, amended March 11, 2014, (the “Motion”), seeking the following relief:
a) an order joining the Ministry as a party to the Action and amending the statement of claim concerning both financial and non-financial matters and to seek, among other relief, a declaration that the Ministry owed small and medium sized school bus operators in Ontario, including the plaintiffs, common law and statutory duties and that it breached those duties (the “Amendment/Joinder Issues”);
b) an order requiring that the Ministry to fund the operators’ legal costs, including the Plaintiffs, as it had funded those of STEO and other consortia (the “Funding Issue”); and
c) in the alternative to the Funding Order, an order declaring that the Ministry’s decision to fund STEO’s costs was ultra vires, prohibiting continuing payments and requiring STEO to repay the Ministry for the costs already received (the “Ultra Vires Issue”).
[14] The Ministry opposed all of the Issues on the Motion. STEO opposed only the Ultra Vires Issue and took no position on the remaining two Issues.
[15] The Motion was argued before the Motions Judge on June 24 and 25, 2014. For reasons released July 11, 2014, the Motions Judge decided the Amendment/Joinder Issues in favour of the Plaintiffs in respect of the non-financial amendments and the joinder of the Ministry as a party; decided the Funding Issue in favour of the Ministry; and adjourned the Ultra Vires Issue to the trial judge.
[16] In deciding the Amendment/Joinder Issues, the Motion Judge rejected the Ministry’s submissions that the remedies sought by the Plaintiffs were untenable and that it owed no duty to the Plaintiffs. The Motion Judge noted, among other things, that the Action was not taking place in a vacuum. He referred to the four other actions which have similar, if not the same issues as the Action being on standby awaiting the results of the Action. He noted that all of the actions, including the Action, are “closely interwoven” and that the Ministry was already a party defendant in two of the other actions and an intervenor in another two.
The Cost Order
[17] At the conclusion of his reasons, the Motion Judge invited the parties to settle costs failing which he indicated the court would fix costs. In the absence of agreement, each of the Plaintiffs, STEO and the Ministry filed submissions and cost outlines.
[18] The Plaintiffs claimed partial indemnity costs for the Amendment/Joinder Issues in the amount of $196,334 made up of $180,529.93 for fees and taxes and $15,804.60 for disbursements. The partial indemnity rates claimed were 60% of actual rates. The Plaintiffs further submitted that there should be no costs with respect to the Funding Issue given the Ministry’s failure to produce documents that only came to light during the Motion. Finally, the Plaintiffs submitted that the costs of the Ultra Vires Issue should be in the cause given the result.
[19] The Ministry submitted that it should receive its costs for the Funding Issue, in which it was successful, on a partial indemnity basis for fees in the amount of $61,950. No disbursements were claimed. It further submitted that the costs of the Amendments/Joinder Issues should be in the cause.
[20] The Ministry took issue with the amount of costs claimed by the Plaintiffs for the Amendment/Joinder Issues and submitted they were excessive and unreasonable for a number of reasons.
[21] STEO sought its costs of the Ultra Vires Issue on a partial indemnity basis in the amount of $93,326.22.
[22] In considering the parties claims for costs, the Motions Judge set out a chart comparing the years of call, the partial indemnity rates claimed and the number of hours expended. He noted that because each of the parties submitted cost outlines in respect of the different issues, it was impossible to compare “apples to apples”. Although there were three separate issues before him, none of the parties, including the Ministry, submitted cost outlines which enabled him to understand the time the parties spent on each issue.
[23] The Motion Judge had no issue with counsels’ hourly rates given their dates of call.
[24] In dealing with the Plaintiffs costs, the Motion Judge stated:
The Crown implies the Plaintiffs enjoyed success on what was a straight forward motion to add a party. The court is satisfied this was not the usual motion to add a party. Normally, adding a party is often consented to, particularly if there is no prejudice. A plaintiff is not required to tender evidence to support a claim. Here the Crown argued the bus operators were not owed a duty, there was no proximity or special relationship, no representations had been made, and the Plaintiffs had not claimed damages which are a pre-requisite for relief. The Crown argued immunity as provided by section 22 of the BPSAA, there was no basis for declaratory relief, and the remedies sought were untenable because they are asserted in respect of policy decisions of the Ministry.
The motion to add a party appeared to be treated as a mini-trial by the Crown, whose strategy it seemed, was to keep the Plaintiffs from leaving the starting gate. It should have been concerned about the test for Rule 21 motions. The Plaintiffs not surprisingly felt compelled to address the points raised by the Crown. A considerable expenditure of time on preparation and presentation occurred. It added to the size of the motion record because material was required to deal with the points the Crown raised in addition to providing the necessary history as to why the parties were in litigation.
[25] In the result, the Motions Judge reduced the Plaintiffs’ cost claim of $196,334 to $150,000 for the Amending/Joinder Issues. The Motions Judge also awarded the Ministry the full amount of its costs claimed of $61,950 for the Funding Issue and directed that the costs of the Ultra Vires Issue be left to the trial judge.
Standard of Review
[26] The determination of costs is discretionary and entitled to a very high degree of deference: Frazer v. Haukioja, 2010 ONCA 249 at para. 75.
[27] A costs order can only be set aside on appeal where the judge making it makes an error in principle or if the costs order is plainly wrong: Hamilton v. Open Window Bakery Ltd., [2004] S.C.R. 303 (S.C.C.) at p. 313.
Analysis
[28] The Ministry submits that the Motion Judge erred in principle and was plainly wrong in awarding the Plaintiffs the costs he did for the following reasons:
The Motions Judge failed to consider the individual factors set out in rule 57.01 of the Rules of Practice and, in particular, whether the cost award was within the reasonable expectations of the Ministry;
The Motion Judge made no assessment of the reasonable range of costs that courts award on pleadings motions.
The Motion Judge erred in his consideration of the time spent on the Amendment/Joinder Issues in the absence of a particularized cost outline from the Plaintiffs. Further, he failed to take into account the time spent on the Funding Issue. The time spent on oral argument is not a basis for assessing time spent on a motion;
The Motion Judge’s decision amounted to double counting. The reduction of the Plaintiffs costs claimed without any breakdown for the time spent on the other issues amounts to a windfall for the Plaintiffs;
The Motion Judge took into account irrelevant considerations, specifically the novelty of the Funding Issue and the allegation of non-disclosure of documents by the Ministry which were irrelevant to the Amendment/Joinder Issues; and
The Motion Judge failed to consider the Plaintiffs claim for disbursements.
Rule 57.01
[29] It is clear from the Motion Judge’s reasons that he was alive to and considered the factors in rule 57.01 in determining the costs. He referred to the rule under the heading of “General Principles” and specifically noted some of the factors to be considered including hourly rates, the reasonableness of the time claimed, the complexity of the proceedings and the importance of the issues to the parties.
[30] While the Motion Judge did not specifically refer to each of the rule 57.01 factors in dealing with the evidence, it is clear that he considered them in determining what a fair and reasonable fee was for the Amendment/Joinder Issues. He specifically considered hourly rates, the importance of the issues, the time spent both for preparation and presentation, and the conduct of the parties and specifically the Ministry (“treated as a mini trial by the Crown”).
[31] The Ministry submits that the Motions Judge failed to consider whether the costs he awarded were within its reasonable expectations. As the Motion Judge noted, however, the Ministry provided no breakdown of its hours for the Amendment/Joinder Issues. In such circumstances, the Ministry cannot now complain that the amount awarded to the Plaintiffs was not within its reasonable expectations. See: Frazer at para. 73.
[32] I am also of the view that the costs awarded to the Plaintiffs were within the reasonable expectations of the Ministry. The Ministry’s costs for the Funding Issues which took less than half a day to argue, totaled $61,950 for one counsel and did not include disbursements. That is not that out of line with the amount awarded to the Plaintiffs after taking into account the increased time to argue, the importance of the issues, the Ministry’s approach to the Issues and subtracting the Plaintiffs’ disbursements.
Range of Costs on Pleading Motions
[33] The reasons of the Motion Judge make it clear that the Amendment/Joinder Issues were not the usual pleadings motion. As found by the Motion Judge, it was a mini trial. I do not consider that in fixing costs the court is restricted to a range of costs for pleading motions or any other type of motion. The costs of a motion must be determined based on the factors set out in rule 57.01 having regard to the specific circumstances of the motion and the costs incurred. The Motions Judge did that here.
[34] Given the complex history of the Action, the related actions and the Motion Judge’s reasons that the Amendment/Joinder Issues were not the ordinary, run of the mill, pleadings motion, prior cost decisions in pleadings motions would be of no assistance in determining costs in this matter.
Determination of Time Spent on the Amendment/Joinder Issues
[35] In reaching his decision on the Plaintiffs’ costs the Motion Judge reduced the amount claimed by the Plaintiffs from $196,334 to $150,000. The Ministry submits that the Motion Judge erred in doing so in the absence of a particularized costs outline from the Plaintiffs detailing the costs incurred for the Amendment/Joinder Issues only.
[36] The absence of a particularized costs outline was not raised before the Motion Judge. Further, and given that it did not provide a breakdown of the hours it incurred in respect of the Amendment/Joinder Issues, the Ministry cannot now complain that the Motion Judge’s approach to determining the allocation of the Plaintiffs’ costs was wrong because there was no breakdown by the Plaintiffs.
[37] The absence of a cost outline dealing with the specific matter does not prevent the court from fixing costs. What is important is that in exercising the discretion to fix costs, the court consider the factors in rule 57.01. The Motions Judge did that here. In the end, he reduced the amount claimed by the Plaintiffs by 25% or 130 hours. In the circumstances, based on his reasons, I cannot conclude the Motion Judge made an error in principle or was clearly wrong.
Double Counting
[38] The issue of double counting is the same issue as the Motion Judge’s determination of the time spent on the Amendment/Joinder Issues. In essence, the Ministry submits that the Motion Judge did not reduce the Plaintiffs claimed costs enough. For the reasons stated, there is no merit to the submission. There is no double counting or windfall. The Motion Judge determined the Plaintiffs’ costs for the Amendment/Joinder Issues based on the factors set out in rule 57.01.
Irrelevant Considerations
[39] At the conclusion of the Motion Judges’ reasons, he noted that in discounting Plaintiffs’ counsel’s hours he was mindful of the non-disclosure allegation; the need to respond to what were essentially trial issues and, while not successful on funding, the issue was both complex and somewhat novel.
[40] The Ministry submits that the Motions Judge erred in taking into account the non-disclosure allegations and the Funding Issue which were irrelevant and in the case of non-disclosure, unproven.
[41] The Motion involved three separate issues. The parties approached the awarding of costs on the basis of the three issues. While the Motion Judge awarded costs on that basis, in so doing I do not consider that he was prevented from considering other factors or conduct on the Motion which impacted the issue of costs.
[42] The issue of the Ministry’s non-disclosure of documents on the Motion was the subject of an earlier finding by the Case Management Judge. While there was no specific finding of non-disclosure by the Motion Judge, the issue and the finding by the Case Management Judge was before him and was something he was entitled to take into account.
[43] The issue of the time spent on the Funding Issue was clearly before the court. In attacking the costs claimed by the Plaintiffs for the Amendment/Joinder Issues, the Ministry submitted that more time was spent in respect of the Funding Issue than the former Issue. Consideration of the Funding Issue was clearly relevant in determining whether the costs claimed by the Plaintiffs’ should be reduced.
Disbursements
[44] Of the $15,804.60 claimed by the Plaintiffs for disbursements, $12,798.59 is for photocopying. The Ministry submits the Motion Judge erred in not reducing the disbursements. It submits that the photocopying costs, which represent almost all the disbursements, should not be allowed given that evidence was not admissible on the Motion.
[45] The Plaintiffs filed extensive motion records dealing with the background behind the Action and the Amendments/Joinder Issue. In his reasons for decision on the Motion, the Motion Judge explicitly found that the Plaintiffs record was helpful and necessary. The Motion Judge also noted in the cost decision that the position of the Ministry added to the size of the record.
[46] Apart from the fact the Ministry did not raise this issue before the Motions Judge, in my view there is no merit to the submission. The disbursements claimed were proper and form part of the $150,000 allocation.
Conclusion
[47] Given the history of the student transportation issues in Ontario and the related actions, there is no question that the Amendment/Joinder Issues were of significant importance to both the Plaintiffs and the Ministry. If the Ministry succeeded in knocking out the Plaintiffs’ claims against it, the result would have a direct significant impact on the Ministry’s involvement in the other actions. It explains why the Ministry turned the Amendment/Joinder Issues into a mini trial and why the Plaintiffs were required to spend a significant amount of time, both in preparation and in presentation to respond.
[48] The Motion Judge was attuned to both the importance of the issues to both parties as well as other factors listed in rule 25.01. In fixing the costs, he reduced the amount claimed by the Plaintiffs by approximately 25%.
[49] Although the amount awarded appears high for an amendment/joinder motion, given the unique context of the Action and the circumstances of the Motion as found by the Motion Judge, I do not consider that he was clearly wrong or erred in principle in awarding the amount of costs to the Plaintiffs as he did.
[50] For the above reasons, therefore, the appeal dismissed. Costs for both the leave and the appeal to the Plaintiffs in the agreed amount of $22,000 in total.
___________________________ L. A. PATTILLO J.
SACHS J.
C. HORKINS J.
Released: April 18, 2016