CITATION: Willies Car & Van Wash Limited v. The Corporation of the County of Simcoe, 2016 ONSC 5786
DIVISIONAL COURT FILE NO.: DC-15-906-00 DATE: 20160915
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
- Molloy, C. Horkins, J.P.R. Howard JJ.
BETWEEN:
Willies Car & Van Wash Limited
Appellant
– and –
The Corporation of the County of Simcoe
Respondent
James Feehely, for the Appellant
Shane Rayman/Conner Harris, for the Respondent
HEARD at Oshawa: September 12, 2016
THE COURT
[1] Willies Car & Van Wash Limited (the “Appellant”) brought a claim against the Corporation of the County of Simcoe (the “Respondent”) for injurious affection where no land is taken, pursuant to the Expropriations Act, R.S.O. 1990, c. E.26.
[2] The Appellant was unsuccessful and its claim was dismissed in its entirety by the Ontario Municipal Board (the “Board”).
[3] In an order dated November 17, 2015, the Board awarded costs to the Respondent in the amount of $86,943.20.
[4] The Appellant appeals the costs order. Pursuant to s. 31 of the Expropriations Act, any decision or order of the Board may be appealed to the Divisional Court.
[5] The Appellant owns and operates a car wash on the south side of Highway 89 in Alliston, in the County of Simcoe. The car wash business has been in operation since approximately 2000, and its customer base included vehicle traffic to and from a nearby Honda automobile manufacturing plant.
[6] The Appellant brought a claim against the Respondent pursuant to s. 26(b) of the Expropriations Act for injurious affection where no land was taken. The claim alleged damages arising from the Respondent’s relocation and closure of a road located in the vicinity of the Appellant’s carwash. This road served the nearby Honda automobile manufacturing plant.
[7] The claim proceeded to a hearing before the Board in June 2014. The Board dismissed the Appellant’s claim against the Respondent in its entirety for the following reasons:
(1) The claim was statute-barred by the one-year limitation period set out in s. 22 of the Expropriations Act.
(2) The Appellant failed to meet the legal threshold for establishing injurious affection where no land is taken.
(3) The Appellant did not demonstrate that the Respondent’s construction caused any reduction in its business.
(4) The Appellant did not present sufficient evidence to demonstrate that it suffered compensable damage.
[8] The Board received written costs submissions from the parties. The Appellant submitted that both parties should bear their own costs. The Respondent’s costs totaled $165,176.55. It requested costs on a partial indemnity basis of $114,138.48.
The Board’s Costs decision
[9] The Board found that unnecessary costs could have been avoided if the Appellant had accepted the Respondent’s offer that was made early in the proceeding.
[10] The Board also found that the offer was bona fide and intended to achieve a settlement of the claim before substantial costs were incurred. The Board concluded that the Appellant “at its own peril, ignored the offer as well as the challenges with respect to the facts of the case and the applicable law and must now face the consequences of its actions”. The Appellant’s conduct in refusing the offer was “unreasonable”. As a result, the Board stated that it should be responsible for some of the Respondent’s costs incurred in defending a claim that had no merit.
[11] The Board substantially reduced the Respondent’s costs as follows:
• Legal Costs: $60,009.20 (This was a 50% discount of $120,018.40).
• Experts Costs: It discounted the expert costs by 40%. The starting point was $44,888.15, discounted to $26,934.00.
• Total costs allowed: $86,943.20.
standard of review
[12] The parties do not agree on the standard of review. The Respondent states that the standard of review is reasonableness. The Appellant relies on Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, to support its position that the standard of review is correctness. This case involved the appeal of a judge’s order and not the order of a tribunal.
[13] The appropriate standard of review on this appeal is reasonableness (see Canada (Human Rights Commission) v. Canada (AG), 2011 SCC 53, [2011] 3 S.C.R. 471).
The Appellant’s Position
[14] It is the Appellant’s position that the appeal should be allowed for the following reasons:
The costs awarded were excessive taking into account the nature, length and complexity of the proceeding, in accordance with the principles set out in rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
The Board Member failed to take into account whether the award was a fair and reasonable amount for an unsuccessful party to pay. Instead, it considered the amount of actual costs that the Respondent incurred.
The Board placed undue reliance on the Respondent’s offer to settle and the timing of that offer to settle.
analysis
[15] For the reasons that follow, the appeal is dismissed.
[16] The Board has the power to order costs of an expropriation proceeding pursuant to s. 32 of the Expropriations Act that states as follows:
Where the amount to which an owner is entitled upon an expropriation or claim for injurious affection is determined by the Board and the amount awarded by the Board is less than 85 per cent of the amount offered by the statutory authority, the Board may make such order, if any, for the payment of costs as it considers appropriate, and may fix the costs in a lump sum or may order that the determination of the amount of such costs be referred to an assessment officer who shall assess and allow the costs in accordance with the order and the tariffs and rules prescribed under clause 44 (d) in like manner to the assessment of costs awarded on a party and party basis.
[17] The Appellant was unsuccessful in its claim against the Respondent and was not awarded compensation. When the authority is successful and a claim is dismissed entirely, the “below 85% threshold” in s. 32(2) of the Expropriations Act is engaged because the award is necessarily less than any offer presented by the authority. The Respondent had served an offer to settle before proceeding to the hearing. It offered the Appellant $15,000. As a result, the Board had the discretion to award costs “as it considers appropriate”.
[18] The Appellant argues that the Board is required to follow the principles set out in rule 57.01 of the Rules of Civil Procedure. It also argues that the Board placed undue reliance on the Respondent’s offer.
[19] The Board’s Rules of Practice and Procedure provide that where a matter is not covered in those rules, the Board may follow the Rules of Civil Procedure.[^1] This default to the Rules of Civil Procedure is discretionary, not mandatory. The factors enumerated in rule 57.01, governing costs awards in the Superior Courts, are instructive but not binding on the Board.
[20] Rule 57.01 provides that the enumerated factors “may” be considered in an award of costs. A Court, and by extension the Board, may consider those factors where applicable. They need not be formulaically applied in every case.
[21] The Board’s decision reveals that it considered a number of the rule 57.01 factors although it did not specifically reference the rule. In particular, the Board considered the respondent’s offer to settle and the conduct of the parties. At paras. 21-22, the Board explained the basis upon which it exercised its discretion to award costs:
[21] The Board has carefully considered the submissions and finds that unnecessary costs could have been avoided if the Claimant had accepted the offer made to it early in the proceeding.
[22] The offer made by the Respondent was bona fide and intended to achieve a settlement of the claim before substantial costs were incurred by it. The Claimant, at its own peril, ignored the offer as well as the challenges with respect to the facts of the case and the applicable law and must now face the consequences of its actions. The Board finds that the Claimant’s conduct in refusing the offer was unreasonable and it should be responsible for some of the costs incurred by the Respondent in defending a claim, which had no merit.
[22] The Appellant further argues that the Board did not consider rule 57.01(1)(0.b) which establishes the principle that the amount of costs should reflect what the unsuccessful party would reasonably expect to pay for the proceeding. The Appellant states that the Board failed to consider whether the amount awarded was fair and reasonable.
[23] The Appellant points to the steps taken after the June 4, 2013 offer to settle. The matter proceeded with a consent Procedural Order, filing of Affidavits of Documents, Examinations for Discovery, over one half day, a motion over a half day and a two day Hearing. Given these steps, the Appellant argues that a costs award of $86,943.20, clearly offends the principle of reasonableness.
[24] The Appellant relies on 1395559 Ontario v. West Nipissing (Township of) (2004), 84 L.C.R. 39 (Ont. Municipal Board) as an example of reasonable costs. This was an expropriation hearing before the Board based on injurious affection. The matter was initially heard in 2004 and appealed to the Divisional Court, where the Divisional Court fixed costs in favour of the claimant in an amount of $24,500.00, plus GST on applicable disbursements. The Board had ordered a re-hearing which took place on October 26-27, 2006 and on the re-hearing, the Board fixed the claimant’s costs at $12,250.00 plus GST on applicable disbursements. First, this 2004 decision did not establish a cap or a high water mark for costs awards. Second, costs are discretionary and as one might expect, the cost of litigating has increased since 2004.
[25] Lastly, the Appellant argues that the Board’s decision was unreasonable because given the circumstances of the Appellant, the award has a chilling effect. Specifically, the Appellant states that it is a small business that was attempting to access the tribunal to have an “opportunity to express what was perceived to be the legitimate concerns of a loss of business resulting from the re-routing of the County Road primarily for the benefit of a large manufacturing operation.” It is submitted that a cost award of this size, for the hearing that took place, fundamentally overrides the principle of reasonableness and fairness and raises the prospect of jeopardizing the principle of facilitating access to justice. Any person or corporation of modest means would find an award of this size for a simple two day hearing to have an extremely chilling effect.
[26] Any litigant, small or large has an obligation to assess its case and the test that it must meet. When an offer to settle is served, the recipient should weigh its chances of success and make an informed reasonable decision.
[27] In this case, the Respondent clearly set out why the Applicant, in its view, would not succeed at the hearing. In particular, the Respondent explained:
(1) That the Board would have to reach the conclusion that the interference created by the Respondent’s works was unreasonable. That this would require the finding of severe interference created by the changes to the road network. The Respondent told the Appellant that in its experience, this is difficult to establish, in even the most extreme circumstances.
(2) That the Board would have to find that the interference creating the loss is not just a loss of traffic volume or a diversion of traffic around the car wash. The Respondent explained that the case law is very clear that loss of traffic counts is in no way compensable at law.
(3) Even if the Board was to find severe interference causing material injury in order to satisfy the private nuisance test, damages could only be established after the Board was satisfied that the changes to the road network are what caused the loss to the Appellant’s business. The Respondent also told the Appellant that although they did not yet have the benefit of an expert report, it appeared that this issue would be called into question by the Board, based on the limited information about the Applicant’s business.
[28] The Appellant proceeded with its case despite the Respondent’s clear position. Not only was the Appellant’s claim of injurious affection statute barred, but the Appellant failed to provide evidence to satisfy the test to prove injurious affection. The Respondent’s warning was fair and the Appellant ignored it at its own peril. For example, at para. 41 of the main decision, the Board stated:
[41] The evidence indicates that the number of vehicles passing through the car wash was approximately the same in fiscal year 2007 after the realignment of County Road 10 as it was in the fiscal year 2006 prior to the realignment and also shows that the reduction in the number of vehicles using the car wash did not occur until the fiscal years 2008 and 2009, which coincided with a severe recession in the automobile industry and a subsequent elimination of a third shift at the Honda plant, according to the Respondent.
[29] The Appellant agrees that having lost the hearing, it was obliged to pay costs. The issue was how much. In the face of the Respondent’s significant request for costs, the Appellant did not provide the Board with its position on what would be reasonable. Furthermore, the Appellant offered no evidence of the hours that his counsel docketed or the fees and disbursements incurred. Such evidence can reflect what the unsuccessful party would reasonably expect to pay in costs to the successful party.
[30] While the costs awarded are high, the amount does not fall outside the boundary of what is reasonable in the circumstances of this case. The Board set the costs based on the unreasonable conduct of the Appellant in refusing the offer and proceeding to a hearing and the lack of any position from the Appellant concerning what was reasonable for costs. The Board significantly reduced the costs that the Respondent requested and fairly considered the factors before it. There is no basis for concluding that the costs award was unreasonable.
[31] The appeal is dismissed.
- Molloy J.
C. Horkins J.
J.P.R. Howard J.
Date of Reasons for Judgment: September 12, 2016
Date of Release: September 15, 2016
Willies Car & Van Wash Limited v. The Corporation of the County of Simcoe
DIVISIONAL COURT FILE NO.: DC-15-906-00 DATE: 20160915
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
A. Molloy, C. Horkins, J.P.R.Howard JJ.
BETWEEN:
Willies Car & Van Wash Limited
Appellant
– and –
The Corporation of the County of Simcoe
Respondent
ORAL REASONS FOR JUDGMENT
THE COURT
Date of Reasons for Judgment: September 12, 2016
Date of Release: September 15, 2016
[^1]: Ontario, Ontario Municipal Board, Rules of Practice and Procedure, r. 4.