ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE COURT OF THE DRAINAGE REFEREE

Landmark v. Hay (Town)

1998 ONDR 2

DATE OF DECISION:

1998-11-11

1998-01

STATUTE:

Drainage Act

HEARING:

BETWEEN:

LANDMARK LTD.

Appellant

-and-

THE MUNICIPALITY OF THE TOWNSHIP OF HAY

Respondent

Muir & Seed Mattes, Evans

David Seed, Counsel for Kimberly L. Evans,

the Appellant Counsel for the Respondent

D E C I S I O N

Pursuant to a Decision of the Drainage Referee dated the 31st day of July, l998 with respect to the above mentioned matter, Legal Counsel was granted an opportunity to make written submissions with respect to the matter of costs. Accordingly, Counsel for the Appellant and Counsel for the Respondent forwarded written submissions to the Drainage Referee at his office at Pembroke, Ontario.

The Appellant sought costs totalling $27,565.80, inclusive of G.S.T., with respect to legal fees and an additional $l5,595.80 with respect to disbursements. The legal fees were claimed at an hourly rate of $125.00. The Appellant subsequently filed a supplementary submission which reduced the hourly rate requested. Costs for the Meeting to Consider, the Court of Revision and the Drainage Tribunal were reduced to a rate of $62.50 per hour (which the Appellant described as a party and party scale). That total claim with respect to legal costs, inclusive of G.S.T., was reduced to $4,413.75. The supplementary submission further amended the claim with respect to costs for appearances before the Drainage Referee to a total of $l0,873.84, inclusive of G.S.T. The supplementary claim with respect to disbursements for matters before the Referee remain the same. The supplementary claim with respect to appearances before the Drainage Referee was further broken down as follows:

57 hours at $62.50 per hour (party and party scale)

for various hearings for a total of $3,562.50

80 hours preparation and trial before the Referee

on what was described as a solicitor and client scale at

$82.50 per hour for a total of $6,600.00

Counsel for the Respondent, in her submissions, requested, on behalf of the Township of Hay, that the Appellant be denied any costs in the proceedings. She proceeded, however, to further state that if the Referee determined that costs ought to be awarded, that costs be fixed at no more than $5,000.00 inclusive of fees, disbursements and G.S.T. Alternatively, she requested that if the Referee was not prepared to fix costs, that the matter be referred for assessment of costs to permit a thorough view of the fees and disbursements claimed.

Counsel for the Appellant argued that Landmark Limited was entitled to receive costs from the llth day of May, l996. That was the day on which the Report was considered by Council and on which Jerry Stark appeared as a representative of Landmark. Mr. Seed argued that if Landmark had been able to discuss matters in the early proceedings with the other Petitioners, providing information it had acquired as a local Developer, that the Petition would never have proceeded. He further reasoned that the Drainage Report would not have proceeded because Landmark would have been prepared to make changes with respect to its property, thus offering acceptable alternatives to the proposed drain. Mr. Seed finally argued that the Drainage Engineer did not correctly advise with respect to the validity of the Petition at an early stage with the result that the matter improperly proceeded causing Landmark increased expense. Landmark therefore had to exercise its rights before the Court of Revision and subsequently the Drainage Tribunal, all of which costs would have been avoided if the Petition had been declared faulty earlier.

Mr. Seed also argued that the scale of costs should be awarded on a more generous basis than party and party costs for the following reasons:

(a) that the Appellant had supplied Counsel for the Township with a copy of the Belzner decision which he maintained was a precedent decision and ought to have been more seriously considered by the Respondent Township;

(b) that efforts to reduce the length of the trial made by the Appellant utilizing the procedural device of "Request to Admit" were never responded to.

(c) that Landmark was unable to obtain the approval of a Procedural Order despite repeated requests.

(d) that a proper Defense was not served until the eve of the Trial.

(e) that an offer to settle prior to Trial was not responded to thereby greatly increasing costs.

(f) that the total costs to Landmark would exceed $60,000 for all matters relating to its defense, which costs increased significantly because the Township refused to deal in full and frank discussions with respect to the matter.

Mr. Seed concluded by requesting party and party costs for appearances before the Tribunal, party and party costs for appearances before the Referee up to April l998 and solicitor and client costs thereafter.

Counsel for the Respondent Township replied, in her submissions, by arguing that the support by the Drainage Tribunal of the Engineer's Report served to undermine the arguments of the Appellant's Counsel, particularly the argument that costs would have been avoided if Landmark had taken steps to provide alternative drainage.

Ms. Evans further stated that the Appellant had the option of proceeding with an appeal pursuant to Section 47 of the Act with respect to the validity of the Petition at an early stage of the proceedings. That would have avoided the costs of the Court of Revision and Drainage Tribunal. She argued that the Appellant, by electing to move to quash the by-law at a much later date rather than challenge the Petition pursuant to Section 47, was in no position to claim costs for the period before the Appeal to the Drainage Referee was filed on January 3 l997.

Council for the Township referred to Section 108 of the Drainage Act which reads -

"The costs of any proceeding before the Referee are in the discretion of the Referee"

She argued that according to the wording of the Section that the Referee was limited to determine costs arising only in proceedings before the Referee.

With respect to the claim for costs to be awarded on a solicitor and client basis, she argued that the position of the Township in refusing to settle was not unreasonable because:

(a) the Court of the Ontario Drainage Referee was not obliged to follow the Belzner decision by the doctrine of "stare decisis";

(b) the statements of the Referee in the Belzner decision were obiter;

(c) there was a clear issue of interpretation with respect to s.4(5) of the Drainage Act.

With respect to the alleged procedural delays, Ms. Evans stated that she did not have any obligation to respond to the request to admit or to file a defense until a Procedural Order was put in place. She maintained that after the June 27th, l998 Procedural Hearing in Goderich, Ontario she had complied by providing an Affidavit of Documents and making the Engineer available for discoveries even before a Procedural Order was issued. Ms. Evans maintained she did not receive a draft copy of the Procedural Order until December 22, l997 and that because the Referee set up a Hearing date on the l9th day of February, l998 it seemed to her that a Procedural Order thereafter was redundant. Accordingly Counsel for the Township argued that the absence of a signed Procedural Order did not increase the Respondent's costs nor did it delay proceedings.

Having considered the submissions filed by Counsel, the Referee arrived at the following conclusions:

(a) That the submission made by Counsel for the Township of Hay referring to Section 108 of the Drainage Act is correct. The wording in the section, namely "costs of proceedings before the Referee" defines jurisdiction with respect to costs. Consequently in the normal course, the Referee would not be disposed to grant costs for proceedings relating to matters not properly before him.

(b) That although costs ought to be awarded to the Appellant, there is no justification for granting costs on a solicitor and client basis for several reasons:

(i) Although there appeared to be a disappointing lack of co-operation between the Parties with respect to Preliminary Matters, any delay arising was not such as to cause significant prejudice. The Court is also cognizant of the fact there is a learning curve that must be surmounted by legal counsel not familiar with Drainage Proceedings.

(ii) The Drainage Referee is further of the opinion that the matter of costs is not to be used as a significant penalty or burden in Drainage matters as is often the case in other more adversarial proceedings. The Drainage Act is enabling and remedial legislation administered by a municipality for the purpose of permitting collective action in drainage projects. Because the Act encroaches extensively on traditional property rights, it provides numerous rights of appeal at all levels of proceedings, including the right of appeal to independent agencies such as the Ontario Drainage Tribunal and the Ontario Drainage Referee. The process enshrined in the Drainage Act has historically evolved over the years to provide for a remarkable procedure whereby under the guidance of a municipality, through the instrument of the Drainage Engineer, private interest and community need for improved drainage are transformed into public projects.

(iii) The process should not be viewed as adversarial, but rather as designed to ensure that all parties receive maximum protection as the scheme unfolds. Thus, it is a mistake to use the matter of costs as a deterrent or penalty when individual landowners sincerely exercise their rights as provided in the Act. Only in circumstances where appeals could be clearly identified as being malicious or vexatious should the awarding of costs on a solicitor and client basis be considered. In the circumstances of this case, there is no evidence that anyone acted otherwise than in good faith and with reasonable intention. Accordingly there is no grounds for awarding costs on a solicitor and client basis.

(iv) In this matter there was an issue of law to be determined. The Belzner case, as Counsel for the Township of Hay correctly indicated, was not binding on the current Referee and the relevant comments consisted of obiter statements which were not even central to that decision. Accordingly, there was an issue of interpretation to be resolved which made settlement of the matter difficult.

With respect to the matter of disbursements, I am not inclined to allow disbursements relating to the expert opinion obtained from the law firm of Gordon and Elliott. Counsel had the right to seek a further legal opinion, but he must be prepared to absorb the cost of the same in his own legal fee. Likewise, the disbursement with respect to the time spent by Jerry Stark in attending various proceedings could not be justified as a qualified legal disbursement.

In the circumstances, I am not inclined to have this matter delayed further by Ordering an Assessment of Costs by a Taxing Officer. I am therefore ordering that legal costs be fixed in the amount of $6,600.00, plus G.S.T., with respect to legal fees together with disbursements fixed in the sum of $3,340.96. These amounts are to be paid by the Municipality of Hay out of the general revenues.

DATED November 11 l998.

Delbert A. O'Brien, Q.C.

Ontario Drainage Referee