Environmental Review Tribunal

Tribunal de l’environnement

ISSUE DATE: September 28, 2016

CASE NO: 10-055

PROCEEDING COMMENCED UNDER section 100.1(7) of the Environmental Protection Act, R.S.O. 1990, c. E.19, as amended

Appellant: Technical Standards and Safety Authority (ERT Case No. 10-055)

Appellant: Doug C. Thompson Fuels Ltd. (ERT Case No. 10-058)

Appellant: Wayne Gendron (ERT Case No. 10-059)

Appellant: Liana Gendron (ERT Case No. 10-060)

Respondent: Corporation of the City of Kawartha Lakes

Subject of appeal: Order to pay in relation to the clean-up of a spill

Property Address/Description: Municipal property adjacent to 93 and 95 Hazel Street

Municipality: Township of Verulam

Upper Tier: City of Kawartha Lakes

ERT Case No.: 10-055

ERT Case Name: Technical Standards and Safety Authority v. Kawartha Lakes (City)

Heard: In writing

Parties

Counsel

Wayne and Liana Gendron

Martin Forget

Technical Standards and Safety Authority

Adam Grant

Doug C. Thompson Fuels Ltd.

Albert Wallrap

Background

1This Order addresses applications for costs brought by the Technical Standards and Safety Authority (“TSSA”) and Doug C. Thompson Fuels Ltd. operating as Thompson Fuels (“Thompson Fuels”) against two appellants (Wayne and Liana Gendron) in respect of a motion heard on February 18, 2016. It also addresses outstanding costs requests arising from earlier stages in this proceeding. The motion was part of a proceeding involving appeals of municipal orders (“s. 100.1 Orders”) issued by the Corporation of the City of Kawartha Lakes (“City”) under s. 100.1 of the Environmental Protection Act (“EPA”) in relation to a spill of furnace oil from a home in the City of Kawartha Lakes. In this proceeding, the homeowners (i.e., the Gendrons) appealed the orders as issued against them. The TSSA and Thompson Fuels were also appellants of the s. 100.1 Orders for a time, but the City revoked those orders and their appeals were disposed of in a Tribunal Order dated January 5, 2015.

2The following chronology provides some background to the current application for costs by the TSSA and Thompson Fuels. On December 30, 2008, the Ministry of the Environment (now the Ministry of the Environment and Climate Change or “MOECC”) issued an order under s. 157.1 of the EPA to Mr. Gendron and, then later, to Ms. Gendron. The Order required the clean-up and remediation of the spill, which contaminated the Gendrons’ property and spread under an adjacent municipally-owned road. The contamination also migrated to adjacent lands owned by the City and to nearby Sturgeon Lake.

3The Gendrons had insurance coverage. Their insurance provider contracted to undertake remediation services to address the spill. However, by the end of March 2009, the limits of the Gendrons’ insurance had been reached and the Gendrons’ insurer indicated that it would cease funding the work. It did not appear to the MOECC that the Gendrons themselves had the financial means to finance continuation of the remediation. The City then undertook work to clean up the spill, as ordered by the MOECC.

4The City later issued four orders to pay under s. 100.1 of the EPA against Mr. Gendron, Ms. Gendron, the TSSA and Thompson Fuels. The s. 100.1 Orders required the orderees to pay $471,691.44 to the City for its costs and expenses incurred in cleaning up the spill.

5The Gendrons, the TSSA and Thompson Fuels appealed the s. 100.1 Orders to the Environmental Review Tribunal (the “Tribunal”). As set out in the Tribunal’s order dated January 5, 2015, the s. 100.1 Orders as against the TSSA and Thompson Fuels were later revoked by the City. The Gendrons did not object to the revocations and associated withdrawal of the appeals by the TSSA and Thompson Fuels.

6In parallel to these proceedings before the Tribunal, both the Gendrons and the City brought separate civil proceedings relating to the spill. The civil proceedings were consolidated on consent. The City’s civil proceedings sought similar relief to that sought in the s. 100.1 Orders being appealed to the Tribunal and include the Gendrons, the TSSA, Thompson Fuels and others as defendants. To prevent duplication of proceedings, the Tribunal adjourned its proceedings several times to allow the civil claims to move forward. On September 24, 2015, the City undertook not to pursue its civil action if the Tribunal proceeded to a hearing. On October 9, 2015, the Tribunal ordered the s. 100.1 hearing to proceed.

7In December 2015, several parties to the City’s civil action, including the TSSA and Thompson Fuels, reached a partial settlement of the City’s civil action. The Gendrons were not parties to the partial settlement agreement and its provisions were not disclosed to them until April 2016 after the main hearing of the appeals to the Tribunal.

8On January 8, 2016, the Gendrons delivered a proposed Amended Notice of Appeal adding new issues to the appeal, including issues relating to contribution and indemnity, and delivered Notices of Allegation against the TSSA, Thompson Fuels and Les Reservoirs D’Acier de Granby Inc. (“Granby”) (another non-party). The appeal was scheduled to be heard in February 2016.

9On February 5, 2016, the City indicated in written submissions that it would be bringing motions to strike the Gendrons’ proposed Amended Notice of Appeal and the Gendrons’ three Notices of Allegation. These are the motions that gave rise to the costs requests that are the subject of this Order. During a telephone conference call (“TCC”) held on February 10, 2016, it became clear that there was a divergence of opinion between the City and the Gendrons as to the proper scope of the upcoming hearing. The Gendrons submitted that the evidence they proposed to introduce was relevant to their original Notice of Appeal and proposed Amended Notice of Appeal, while the City submitted that relevance should be measured against s. 100.1(15) of the EPA. The TSSA, Thompson Fuels and Granby also participated in the TCC and indicated that they wished to have status to speak to the issue of the proper scope of the proceeding and the validity of the Notices of Allegation.

10On February 12, 2016, the Tribunal granted the TSSA, Thompson Fuels and Granby party status for the specific purpose of delivering submissions in response to the City’s motion on these issues.

11Later on February 12, 2016, the Gendrons notified the parties and the Tribunal that they would no longer be seeking leave to amend their Notice of Appeal and then on February 17, 2016, the Gendrons notified the parties and the Tribunal that they were withdrawing the Notices of Allegation.

12The City’s motions were heard on February 18, 2016. Although the Gendrons had withdrawn the Notices of Allegation, the Tribunal permitted the TSSA, Thompson Fuels, and Granby to make arguments on the Notices because of the remaining possibility that the Gendrons might seek to revive the contribution and indemnification issue since the parties did not appear to agree on the factual basis for the Gendrons’ withdrawal of the Notices of Allegation (see para. 62 of the Tribunal’s Order, dated March 10, 2016).

13On February 19, 2016, the Tribunal issued an Order providing procedural directions on, among other things, scoping of the hearing, accepting the Gendrons’ withdrawal of the Notices of Allegation and prohibiting them from pursuing the allegations set out in those Notices at the hearing. On March 10, 2016, the Tribunal released its reasons for that Order (“Reasons for the Scoping Order”). The Tribunal found that it did not have the authority under s. 100.1 of the EPA to consider contribution and indemnity claims by an orderee and that in any event the Gendrons’ Notices of Allegation were delivered outside the permissible timeframe set out in the Tribunal’s Rules for their delivery.

14Given the outcome of the City’s motions, the TSSA and Thompson Fuels seek payment from the Gendrons of their costs incurred in preparing and delivering submissions on the Notices of Allegation and on the Gendrons’ proposed amendments to the Notice of Appeal. The TSSA seeks $3,370.55 in costs against the Gendrons and Thompson Fuels seeks costs of $11,400.68 against the Gendrons. Granby did not apply for costs. The City did not seek costs or file submissions in response to the TSSA’s and Thompson Fuels’ applications.

15The hearing of the main appeal was held in February 2016 in Lindsay, Ontario. In its decision dated June 30, 2016, the Tribunal allowed the appeal by Ms. Gendron and allowed in part the appeal by Mr. Gendron.

Relevant Legislation and Rules

16 Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 (“SPPA”)

17.1(1) Subject to subsection (2), a tribunal may, in the circumstances set out in rules made under subsection (4), order a party to pay all or part of another party’s costs in a proceeding.

(2) A tribunal shall not make an order to pay costs under this section unless,

(a) the conduct or course of conduct of a party has been unreasonable, frivolous or vexatious or a party has acted in bad faith; and

(b) the tribunal has made rules under subsection (4).

(3) The amount of the costs ordered under this section shall be determined in accordance with the rules made under subsection (4).

(4) A tribunal may make rules with respect to,

(a) the ordering of costs;

(b) the circumstances in which costs may be ordered; and

The Tribunal’s Rules of Practice (“Rules”)

COSTS

A costs award refers to the reimbursement of reasonable and eligible expenditures incurred by a Party for participation in a proceeding before the Tribunal. The objectives of the Tribunal’s costs Rules are to: provide consistency and predictability in the awarding of costs by outlining relevant principles and evaluation criteria; to encourage responsible conduct in proceedings; and to discourage unreasonable conduct.
A wide authority to award costs applies to proceedings under the Consolidated Hearings Act and the Environmental Assessment Act and to proceedings under sections 30, 32, and 36 of the Environmental Protection Act and sections 54, 55, and 74 of the Ontario Water Resources Act. A limited authority to award costs in situations of improper conduct applies to all proceedings before the Tribunal except Niagara Escarpment Plan amendment proceedings under the Niagara Escarpment Planning and Development Act and proceedings under the Oak Ridges Moraine Conservation Act, 2001 and Greenbelt Act, 2005.
Under section 17.1 of the Statutory Powers Procedure Act, the Tribunal may only order costs to be paid if the conduct or course of conduct of a Party has been unreasonable, frivolous or vexatious or if a Party has acted in bad faith.

This power applies to all proceedings before the Tribunal except proceedings under the Oak Ridges Moraine Conservation Act, 2001, proceedings under the Greenbelt Act, 2005 and Niagara Escarpment Plan amendment proceedings under the Niagara Escarpment Planning and Development Act, unless the Niagara Escarpment Plan amendment proceeding is brought under the Consolidated Hearings Act.

It is expected that this power will only be used in the rare case where a Party’s conduct warrants such an award. In determining an award of costs under this Rule, the Tribunal may consider, among other things, the conduct of the requesting Party as well as whether the Party against whom a costs award is sought:

(a) failed to attend a Hearing or to send a representative when properly given notice, without contacting the Case Coordinator;

(b) failed to co-operate, changed a position without notice, or introduced an issue or evidence not previously mentioned;

(d) failed to comply with the Tribunal’s Rules or procedural orders;

(e) caused unnecessary adjournments or delays or failed to prepare adequately for Hearings;

(f) failed to present evidence, continued to deal with irrelevant issues, or asked questions or acted in a manner that the Tribunal determined to be improper;

(g) failed to make reasonable efforts to combine submissions with Parties of similar interest;

(h) acted disrespectfully or maligned the character of another Party; and,

(i) knowingly presented false or misleading evidence.

The Tribunal is not bound to order costs when any of the examples listed in Rule 225 occurs nor does the Tribunal have to find that one of the examples occurred in order to conclude that the conduct of a Party has been unreasonable, frivolous or vexatious or that a Party has acted in bad faith. The Tribunal will also consider whether the issues respecting the conduct of such a Party can be addressed by a denial or reduction of costs in its favour rather than a costs award against it.

Costs for Motions

Parties shall take all reasonable steps to avoid unnecessary motions and other actions that unduly delay the proceeding. If a motion, or the opposition to a motion, is unreasonable, frivolous, vexatious or brought in bad faith, costs may be awarded, payable forthwith, against a Party.

Issue

17The issue before the Tribunal is whether to order the Gendrons to pay costs to the TSSA and Thompson Fuels related to their participation in the February 18, 2016 motion, including responding to the Gendrons’ Notices of Allegation and proposed Amended Notice of Appeal.

Submissions of the Parties

The TSSA’s and Thompson Fuels’ Submissions

18The TSSA submits that the Gendrons’ delivery of the Notices of Allegation and seeking of leave to amend the Notice of Appeal to include relief of contribution and indemnity one year after the City’s s. 100.1 Order was withdrawn against it was unmerited. It states that the Gendrons needlessly compelled the TSSA to re-engage in the appeal and prepare and present submissions on the City’s motion. It argues that the Gendrons’ subsequent withdrawal of the Notices of Allegation and decision not to seek leave to amend the Notice of Appeal are evidence that their actions were frivolous and vexatious. The TSSA argues that the intent behind the Gendrons’ conduct was to belatedly draw the TSSA into the appeal.

19Thompson Fuels argues that the Gendrons’ conduct was unreasonable, improper, vexatious, frivolous and an abuse of process and that the Gendrons acted in bad faith. It argues that the Gendrons: (a) failed to comply with the Tribunal’s January 5, 2015 Order removing Thompson Fuels and the TSSA as parties; (b) continued their allegations for contribution and indemnity after agreeing to withdraw them and after receiving the Tribunal’s Order of February 19, 2016; (c) failed to withdraw the Notices of Allegation and their request to seek leave to amend the Notice of Appeal on a timely basis; (d) failed to properly serve and file the Notices of Allegation in accordance with Rules 84 and 85 of the Tribunal’s Rules; (e) made meritless allegations; and (f) improperly disclosed confidential and privileged settlement information. It submits that the Tribunal has no authority to consider allegations between a party and a non-party and that the Gendrons’ request to amend the Notice of Appeal was an attempt to delay the main appeal hearing and undermine the partial settlement agreement. Thompson Fuels submits that due to the Gendrons’ conduct, it was required to obtain standing and incur costs responding to the allegations.

The Gendrons’ Submissions

20The Gendrons submit that after the partial settlement of the City’s civil claim, they requested the City, TSSA and Thompson Fuels to provide them with the terms of the settlement. They state that these requests were refused. The Gendrons submit that as a result, they concluded that the partial settlement agreement contained a provision whereby the City would hold the parties to the agreement harmless for their remaining defences. The Gendrons submit that they notified the TSSA and Thompson Fuels on January 6, 2016 that they would be seeking contribution and indemnity from them under s. 100.1(6) of the EPA and gave them notice that they wished to amend the Notice of Appeal to include claims for this relief. They submit that they also promptly delivered the Notices of Allegation.

21The Gendrons submit that on February 12, 2016, the City served motion materials in its civil action, which stated that, as of the commencement of the Tribunal appeal hearing on February 22, 2016, the City expected to have fully recovered its damages. The Gendrons argue that this indicated that the City would be fully indemnified and the Gendrons therefore withdrew the Notices of Allegation on February 17, 2016 believing that the Tribunal appeal was no longer necessary.

22The Gendrons argue that their conduct was not unreasonable, frivolous, vexatious or done in bad faith. They submit that they consistently held the position in both the civil and Tribunal proceedings that the TSSA and Thompson Fuels were responsible for the spill and that they gave the TSSA and Thompson Fuels notice that they would be seeking contribution and indemnity under s. 100.1(6) of the EPA. They argue that they made several requests to the TSSA and Thompson Fuels to obtain details of the partial settlement of the City’s civil claim, responses to which, the Gendrons submit, would have avoided the need for notices of allegation to be delivered as they would have demonstrated that the City was being fully indemnified. They submit that once the terms of the partial settlement agreement were made known to them, the Gendrons withdrew the Notices of Allegation.

23The Gendrons also argue that at the time that the Notices of Allegation were delivered, s. 100.1(6) of the EPA on contribution and indemnity had never before been interpreted by the Tribunal. Referring to Greenspace Alliance of Canada's Capital v. Ontario (Ministry of the Environment), [2009] O.E.R.T.D. No. 28 at para. 37 (“Greenspace”), the Gendrons argue that the Tribunal ought not to award costs arising from the adjudication of “important issues needing resolution”. They submit that in the present case, there was no case law or guidance on the application of s. 100.1(6) and it was not settled whether the Tribunal could apply s.100.1(6) to allow a party to recover contribution and indemnity. They submit that they did not withdraw the Notices of Allegation because they lacked merit (as suggested by the TSSA), but because they were no longer necessary after the City’s disclosure that it would be fully indemnified, which the Gendrons believed would make the appeal unnecessary.

24The Gendrons argue that with the withdrawal of the Notices of Allegation, there was no need for the TSSA or Thompson Fuels to attend the motion hearing. They argue that they complied with the Tribunal’s order, dated February 19, 2016, noting that while they were prevented from seeking contribution and indemnity before the Tribunal, they still intended to seek this relief before the civil courts. They also submit that they did not attempt to undermine the partial settlement of the City’s civil claim or delay the Tribunal proceeding, noting that neither of these outcomes would have benefited them.

25The Gendrons argue that neither the TSSA nor Thompson Fuels has suffered prejudice from the Gendrons’ conduct and that, in any event, more than a course of conduct which negatively affects a party is needed for the Tribunal to award costs. They submit that delivering the Notices of Allegation was not unreasonable as it did not interfere with the Tribunal’s ability to secure a just, expeditious and cost-effective determination of the proceeding and that the proceeding continued as scheduled.

26The Gendrons also submit that the TSSA and Thompson Fuels ought not to have incurred any expenses because, under the partial settlement agreement, the City agreed to hold them harmless and to indemnify them. They would therefore have no further expenses to incur in their defences. The Gendrons submit that they are impecunious and not insured for any loss or costs before the Tribunal. They also submit that the requested costs are not justified, documented or verified, the requests are not consistent with the principles set out in Rule 217 of the Tribunal’s Rules, they include costs that were not incurred for the proceeding before the Tribunal, and they are not adequately detailed or substantiated as required under Rule 218.

The TSSA’s and Thompson Fuels’ Reply Submissions

27The TSSA submits that the partial settlement agreement was not properly brought before the Tribunal by way of affidavit and that the agreement should be struck from the Gendrons’ submissions or not relied upon by the Tribunal. It also submits that the paragraphs of the partial settlement agreement relied on by the Gendrons were draft provisions which have since been deleted and cannot be relied on to support the Gendrons’ position.

28Thompson Fuels submits that the partial settlement of the City’s civil claim, the Gendrons’ lack of insurance coverage and their impecuniosity are not relevant and any references to them are improper. It argues that the Gendrons’ disclosure of correspondence regarding the partial settlement agreement breaches the implied undertaking rule and breaches the confidentiality provisions in the settlement agreement. It argues that the privacy of the parties to that agreement should be protected by the Tribunal. Like the TSSA, it submits that the version of the partial settlement agreement that is relied on by the Gendrons is not attached to an affidavit and is incomplete and should not be relied on by the Tribunal.

Analysis and Findings

29In Baker v. Ontario (Ministry of the Environment), [2009] O.E.R.T.D. No. 29 (“Baker”), at para. 38, and in Peel (Regional Municipality) v. Ontario (Ministry of the Environment and Climate Change), [2016] O.E.R.T.D. No. 16, at para. 28, the Tribunal adopted a three-stage analysis to be undertaken when determining whether to grant an award of costs in cases such as this:

The Tribunal must first determine whether a Party has engaged in unreasonable, frivolous, or vexatious conduct or acted in bad faith.
If so, the Tribunal then considers whether to exercise its discretion to award costs.
If the Tribunal exercises its discretion to award costs, the Tribunal then exercises its further discretion in determining the appropriate amount of the cost award.

The Tribunal applies this three-stage analysis here.

1) Whether the Gendrons engaged in unreasonable, frivolous, or vexatious conduct or acted in bad faith

30Under s. 17.1(2) of the SPPA, a tribunal shall not award costs unless the conduct or course of conduct of a party has been unreasonable, frivolous or vexatious or a party has acted in bad faith and the tribunal’s rules provide for the awarding of costs. Rules 225 to 227 of the Tribunal’s Rules provide the Tribunal with these powers to award costs for these types of improper conduct.

31As discussed in Baker, the standard by which the Tribunal determines whether a party’s conduct is unreasonable is “whether the conduct or course of conduct interferes with the Tribunal’s ability to secure the just, most expeditious and cost-effective determination of the proceeding before it”. In Baker, at para. 34, the Tribunal explained that there are three issues that the Tribunal must consider when applying this standard:

First, it is the adjudicator who must measure the actual impact of the impugned conduct, or course of conduct, on the course of the proceeding, which includes consideration of the impact of the conduct on other parties. Secondly, “unreasonableness” must be assessed in terms of the circumstances which were known at the time of the impugned conduct occurred, or the time period over which the impugned conduct course of conduct transpired. For conduct to be unreasonable, a party must make an improper decision to act or fail to act, during the course of the proceeding. A decision can only be improper if the impropriety was clear in the circumstances at the time the decision was made. Thirdly, an assessment as to whether conduct is unreasonable does not turn solely on whether the impugned conduct negatively affected another party. Similarly, the Tribunal may objectively find a party’s conduct to be unreasonable, even though the party perceived it to be reasonable because it served the party’s individual interests at the time.

32In Johnson v. Ontario (Ministry of the Environment), [2006] O.E.R.T.D. No. 20 (“Johnson”), the Tribunal analyzed the constitutive elements of frivolous conduct. In that case, at para. 15, the Tribunal referred to Black’s Law Dictionary (West Publishing Company, 1991), at page 677, which defines frivolous as “lacking a legal basis or legal merit; not serious; not reasonably purposeful”. At para. 31 of Johnson, the Tribunal elaborated that frivolous conduct, whether intended or not, involves putting forward groundless arguments, but it is not synonymous with an unsuccessful argument.

33Vexatious conduct includes conduct that is undertaken with the intent to harass, annoy or cause financial cost to a party. Actions taken in bad faith include those that are undertaken with a dishonest intent or with an aim that is adverse to the Tribunal process. Both vexatious conduct and bad faith actions involve a degree of improper motivation (see Johnson,at para. 31).

34Although the examples of improper conduct listed under Rule 225 provide guidance, the Tribunal may make a finding of improper conduct even if none of these examples occurs, or may exercise its discretion and not award costs when listed conduct is found to have occurred. In the present case, the moving parties’ allegations of improper conduct include: the Gendrons failed to comply with the Tribunal’s Orders, the Gendrons did not act on a timely basis, the Gendrons failed to comply with the requirements of the EPA and the Tribunal’s Rules, and their allegations claimed in the Notices lacked merit.

(i) Alleged failure to comply with the Tribunal’s Orders

35Thompson Fuels argues that by belatedly delivering the Notices of Allegation in January 2016, the Gendrons failed to comply with the Tribunal’s Order, dated January 5, 2015, removing Thompson Fuels and the TSSA from the proceeding. It also argues that the Gendrons failed to comply with the Tribunal’s Order, dated February 19, 2016, by continuing to seek contribution and indemnity after that Order was released. In response, the Gendrons argue that they did not contravene any of the Tribunal’s orders and that their continued efforts to seek contribution and indemnity were in the context of seeking this relief in the civil proceedings.

36The Tribunal notes that the Notices of Allegation request that “the Tribunal provide relief from the decision under appeal because of the acts or omissions [of] the non-Parties to the appeal, Thompson [Fuels] and TSSA”. The Gendrons’ Notices of Allegation did not seek to have the TSSA or Thompson Fuels added as parties.

37The Tribunal finds that its acceptance of the withdrawal of the TSSA and Thompson Fuels from the proceeding on January 5, 2015 did not have the effect of prohibiting the Gendrons from making allegations against the TSSA and Thompson Fuels in the future under Rule 85 should they learn of acts or omissions that would permit that Rule’s application. The January 5, 2015 Order solely accepted their withdrawal as parties. Accordingly, the Tribunal finds that the Gendrons did not contravene that Order.

38With respect to the Gendrons’ letter dated February 19, 2016 at 4:08 pm, the Tribunal notes that it states that they

…will be seeking recovery of all damages, interests and costs they are found to owe by the [Tribunal] at the hearing starting next week. They rely on s. 100.1 (6) and 99.1 (6) and (7) of the EPA and the common law and equitable rights to recovery.

39Although the letter could have more clearly specified that the Gendrons would be seeking this relief through the civil courts, the fact that they refer to the EPA, the common law and equitable rights as their bases for recovery reveals this to be the case. Given the Tribunal’s findings in the February 19, 2016 Order, the Tribunal finds that it was reasonable for the Gendrons to notify the TSSA and Thompson Fuels that these allegations were still being pursued in the civil proceedings. The Tribunal finds that the Gendrons did not contravene the Tribunal’s February 19, 2016 Order in writing the letter of the same date.

40As a result, the Tribunal finds that the Gendrons’ conduct was in compliance with the Tribunal’s Orders and did not interfere with the Tribunal’s ability to secure the just, most expeditious and cost-effective determination of the proceedings. This conduct, or course of conduct, was not unreasonable and there is no evidence that this conduct was frivolous or vexatious or that the Gendrons acted in bad faith in this regard.

(ii) Alleged failure to withdraw the Notices of Allegation and request for leave to amend the Notice of Appeal on a timely basis

41Thompson Fuels argues that the Gendrons’ request for leave to amend the Notice of Appeal and Notices of Allegation should have been withdrawn on a more timely basis. It argues that the Gendrons waited to withdraw the request for leave until six days before the hearing of the City’s motions, and to withdraw the Notices of Allegation until the day before the hearing of the motions and five days before the appeal hearing, resulting in its needless preparation for the motion and the main hearing.

42The Gendrons dispute that their actions were not timely. They state that they were informed by the City on December 14, 2015 that the City had entered into a partial settlement of its civil claim; however, the parties to that agreement subsequently refused to provide them with details. They submit that they believed that the partial settlement agreement contained provisions that the City would hold harmless the parties to the agreement for their remaining defences. They submit that due to these circumstances, they decided to seek leave to amend the Notice of Appeal to include allegations on contribution and indemnity from the TSSA and Thompson Fuels and deliver the Notices of Allegation. They submit that in correspondence to the parties and the Tribunal, dated February 12, 2016, they withdrew their request to seek leave to amend the Notice of Appeal as they had no evidence that a settlement had been concluded, their allegations seeking contribution and indemnity were adequately set out in the Notices of Allegation and other amendments were already reflected in the original Notice of Appeal, making the proposed amendments unnecessary. The Gendrons submit that they withdrew the Notices of Allegation shortly after receiving correspondence from the City indicating that it would be fully indemnified through the partial settlement agreement.

43The Tribunal notes that the scope of the appeal may have been expanded if the Gendrons had properly delivered the Notices of Allegation and been successful in their argument that the Tribunal has the authority to apply s. 100.1(6) of the EPA. Prior to this proceeding, s. 100.1(6) had not before been interpreted by the Tribunal or the courts and it was not unreasonable for the Gendrons to attempt to apply it. The Tribunal finds that the Gendrons believed they had grounds to seek contribution and indemnity before the Tribunal and that they withdrew their request for leave to amend the Notice of Appeal and allegations shortly after they believed they were no longer necessary. The Tribunal finds that, based on the submissions before it, the Gendrons’ conduct, or course of conduct, in respect of the timing of the withdrawal of the request for leave and the Notices of Allegation did not delay the proceeding or interfere with the Tribunal’s ability to secure the just, most expeditious and cost-effective determination of the proceedings. The Tribunal finds that the Gendrons’ conduct was neither groundless nor improperly motivated. The Tribunal finds that this conduct, or course of conduct, was not unreasonable, frivolous or vexations and there is no evidence that the Gendrons acted in bad faith in this regard.

(iii) Alleged failure to comply with the EPA and the Tribunal’s Rules

44The TSSA submits that the Gendrons did not seek to amend their Notice of Appeal under s. 100.1(10) of the EPA until directed by the Tribunal to do so on February 10, 2016. The TSSA and Thompson Fuels both argue that the Gendrons did not comply with Rules 84 and 85 (relating to allegations against persons who are not parties) when serving and filing the Notices of Allegation. In response, the Gendrons submit that, on the whole, delivering the Notices of Allegation was not unreasonable as it did not interfere with the Tribunal’s ability to secure a just, expeditious and cost-effective determination of the proceeding and the proceeding continued as scheduled.

45Regarding the proposed amendment to the Notice of Appeal, s. 100.1(10) of the EPA states that “the person who required the hearing under subsection (7) is not entitled to appeal a portion of the order, or to rely on a ground, that is not stated in the person’s notice requiring the hearing”. The Tribunal finds that as the hearing of the appeal had not yet commenced, the Gendrons did not technically contravene this section of the EPA as they still had opportunities to seek leave prior to the hearing, provided they met the requirements in s. 100.1(11) of the EPA. The Tribunal, however, notes that the timing of such applications may affect their success.

46Regarding notices of allegation, the Tribunal outlined their function in Rubin v. Ontario (Ministry of the Environment and Climate Change), [2016] O.E.R.T.D. No. 20 where it stated, at para. 57, that a Notice of Allegation is …

… merely a notice mechanism to allow the recipients to know that a proceeding that involves allegations against them is taking place. The recipients can then decide whether they want to seek status to participate or not.

The Tribunal notes that such notices are delivered by a party and, as in the present case, are not vetted by the Tribunal unless they are challenged by another party or recipient.

47The Tribunal addressed the application of Rules 84 and 85 in this case in the Reasons for the Scoping Order. It stated at para. 63:

[…] the Tribunal agrees with the added parties that, in the particular circumstances of this case, the Gendrons failed to explain their inordinate delay in issuing the Notices under Rules 84 and 85. Based on the materials filed (including information from the related civil actions), the Tribunal is persuaded by the added parties’ argument that the Gendrons have been aware of the alleged acts or omissions that form the basis for the Notices for many years. Nonetheless, the Gendrons did not serve and file the Notices until January 2016, years after these appeals were commenced and many months after the hearing dates in February 2016 were set (see Tribunal order of October 9, 2015). The Rules require timely service of Notices of Allegations against non-parties. Granby has been a non-party since the outset of this proceeding and TSSA and Thompson have been non-parties since the Tribunal’s order of January 5, 2015. The Gendrons did not make any argument to explain their significant delay in serving and filing the Notices, such that they were only issued in the weeks coming up to the main hearing. Therefore, in the specific circumstances of this case, the Tribunal elected to exercise its discretion under Rules 16(b) and (f) and prohibit the Gendrons from pursuing the allegations set out in the Notices, regardless of their withdrawal, for failure to comply with Rules 84 and 85.

48In their submissions on costs, the Gendrons sought to explain the timing of the issuance of the Notices in light of their understanding of the partial settlement agreement, but the Tribunal finds that they were still well past the deadline set out in Rule 85 under any scenario. The Gendrons simply did not comply with Rules 84 and 85, which require that a Notice of Allegation be filed at the outset of an appeal, or within five days of learning about a non-party’s acts or omissions that are relevant to the appeal. Failure to comply with the Tribunal’s Rules is listed under Rule 225 as a consideration that the Tribunal may take into account when determining whether to award costs. The Gendrons were aware of the involvement of the TSSA and Thompson Fuels in this matter for several years. The Tribunal finds that the Gendrons’ delivery of the Notices of Allegation in non-compliance with Rule 85 unduly complicated the issues before the Tribunal and thereby interfered with the Tribunal’s ability to secure a just, expeditious and cost-effective determination of the proceeding. The Tribunal further finds that the Gendrons failed to provide valid grounds for the late delivery of the Notices of Allegation. The Tribunal, therefore, finds that the Gendrons’ non-compliance with Rules 84 and 85 and late delivery of the Notices of Allegation constituted unreasonable and frivolous conduct. The Tribunal notes that it heard submissions and addressed the merit of the Notices of Allegation, even after the Notices were withdrawn, to ensure that the issue was addressed and to prevent their re-issuance later in the proceeding. Although Thompson Fuels argues that the Gendrons were improperly motivated to delay the hearing and undermine the partial settlement of the City’s civil claim, the Tribunal notes that no evidence was presented demonstrating that this was the intent behind the Gendrons’ conduct in this regard.

(iv) Merit of Allegations for Contribution and Indemnity

49Thompson Fuels argues that the Gendrons’ allegations for contribution and indemnity in the Notices of Allegation and proposed amended Notice of Appeal were without legal foundation and that they pursued irrelevant issues.

50The Gendrons argue that the basis for their allegations was s. 100.1(6) of the EPA, which had never before been interpreted by the Tribunal. They argue that they had reason to believe that their allegations had merit. The Gendrons also argue that they did not pursue irrelevant issues. They submit that there was uncertainty over whether s. 100.1(6) could be applied by the Tribunal. Referring to Greenspace, they argue that the application of s. 100.1(6) was an important issue needing resolution, which should not give rise to a costs award.

51In the Reasons for the Scoping Order, the Tribunal set out its interpretation of s. 100.1(6) at paras. 53-62. Given the lack of earlier consideration and guidance from the Tribunal on the application of s. 100.1(6) and the various outcomes that could result depending on how s. 100.1(6) was interpreted, the Tribunal agrees that the interpretation of s. 100.1(6) was an important issue requiring resolution and was relevant to the subject matter of the appeals. The Tribunal finds that the Gendrons’ conduct, or course of conduct, in this regard was not improper.

(v) Other Issues

52Thompson Fuels alleges that the Gendrons improperly breached the partial settlement agreement, but provided no evidence that the Gendrons were a party to that agreement. It asserts that the Gendrons misrepresented the facts surrounding the agreement, but provided no evidence demonstrating this. It argues that confidential or privileged information was disclosed and that the privacy of non-parties was violated, but does not dispute that the information in question was taken from a public source, namely motion materials filed in the City’s civil proceedings.

53The Tribunal finds that, although there may be issues regarding the admissibility of the partial settlement agreement, there is no evidence before it that demonstrates that the Gendrons engaged in unreasonable conduct or acted in bad faith. Thompson Fuels failed to demonstrate on a balance of probabilities that the Gendrons were improperly motivated. It argues that the Gendrons aimed to upset the partial settlement agreement, but there is no clear evidence to support this allegation. The Tribunal, therefore, does not find that the Gendrons’ conduct was improper in these regards.

(vi) Conclusion on the First Step in the Analysis

54To conclude this section, the Tribunal finds that the Gendrons’ non-compliance with Rules 84 and 85 constituted unreasonable and frivolous conduct. The Tribunal must next decide whether an award of costs is appropriate.

2) Whether the Tribunal should exercise its discretion to award costs.

55In deciding whether or not to exercise its discretion, the Tribunal must consider, among other things, the public interest purposes of the applicable legislation and whether the impugned conduct or course of conduct resulted in prejudice to the party seeking costs.

56The TSSA argues that the Gendrons’ conduct was intended to draw the TSSA into the appeal at the last minute causing it to incur costs and that such conduct should be penalized. Referring to Rules 4 and 7, Thompson Fuels submits that the Tribunal’s Rules are to be liberally interpreted to “secure the just, most expeditious and cost-effective determination of every proceeding on its merits” and the “Tribunal may do whatever is necessary and permitted by law to enable it to effectively and completely adjudicate the matter”. Citing Rule 212, it argues that the objectives of the Tribunal’s rules on costs include “to encourage responsible conduct in proceedings and to discourage unreasonable conduct”. It submits that an award of costs is warranted when improper conduct, such as that of the Gendrons, is established. It argues that the Gendrons “caused sufficient uncertainty and unnecessary waste that warrants a costs award” and that awarding costs against the Gendrons would be consistent with the principles and criteria set out in the EPA and the Tribunal’s Rules.

57The Gendrons respond that the Tribunal’s power to award costs is discretionary and is only applied in very rare circumstances. In this case, they argue that neither the TSSA nor Thompson Fuels suffered any prejudice as they were put on notice prior to the issuance of the Notices of Allegation and, in any event, the Gendrons’ arguments on contribution and indemnity were unsuccessful. They argue that costs do not follow the event in Tribunal proceedings. The Gendrons also submit that under the partial settlement agreement, the City will indemnify the TSSA and Thompson Fuels and they therefore have no costs to seek. They further submit that they are impecunious and uninsured for any costs imposed by the Tribunal.

58In 453294 Ontario Inc. (Phelan) v. Niagara Escarpment Commission, [2007] O.E.R.T.D. No. 47, the Niagara Escarpment Hearing Office found, at para. 31, that although the appellant’s conduct in that case was improper, it “remained by and large within the four corners of the Rules of Practice” and the circumstances of the case did not warrant an award of costs. In Baker, at paras. 43 and 70, the Tribunal found that non-compliance with a procedural direction in that case did not result in prejudice to the parties. It found that such a “narrow incident” of unreasonable conduct did not warrant an award of costs.

59In the present case, the TSSA and Thompson Fuels argue that they were prejudiced by the Gendrons’ conduct in that they felt compelled to respond to the Notices of Allegation and incurred the legal costs in doing so. They did not reply to the Gendrons’ argument that they will be indemnified by the City for these costs and will therefore not suffer any prejudice.

60As the Tribunal previously noted in an earlier application for costs in this proceeding (see the Tribunal’s Order dated February 13, 2013 (the “February 2013 Order”) at para. 50), a finding by the Tribunal of unreasonable conduct does not inevitably result in a costs award. This is reflected in Rule 225, which states that it is expected that costs will be awarded only in the rare case where a party’s conduct warrants such an award.

61As noted at para. 53 of the February 2013 Order, in exercising its discretion, the Tribunal must consider, among other things, the public interest purposes of the applicable legislation. When determining whether to exercise its discretion to award costs in a proceeding brought under s. 100.1 (7) of the EPA, the Tribunal must take into account both the purposes of the Act to conserve and protect the natural environment (see s. 3 of the EPA) and the objectives of s. 100.1 of the EPA to provide a summary mechanism for clean-up cost recovery by municipalities.

62The Tribunal notes that the Gendrons’ failure to comply with the Rules did not interfere with the purposes of the EPA to conserve and protect the natural environment and or unduly prejudice the City in its efforts to recover its clean-up costs. The Tribunal also notes that neither the TSSA nor Thompson Fuels replied to the Gendrons’ arguments that they will be indemnified and will therefore not be financially prejudiced by the Gendrons’ conduct. In terms of a need to penalize the Gendrons for their improper conduct, the Tribunal finds that its prohibition on allowing them to pursue their allegations of contribution and indemnity has already addressed this (see the Reasons for the Scoping Order). The Tribunal’s imposition of that sanction under Rule 16 should send the appropriate message that non-compliance with its Rules can have significant consequences and there is no need to impose another penalty (i.e., costs) in these particular circumstances. Consequently the Rule 212 objectives of encouraging responsible conduct and discouraging unreasonable conduct have already been addressed via the Tribunal’s previous order under Rule 16.

63As a result, the Tribunal finds that, although the Gendrons’ conduct was an inconvenience to the TSSA and Thompson Fuels, there is no evidence that they were unduly prejudiced. As well, while a costs award would encourage parties to better comply with the Tribunal’s Rules, that objective has been addressed by the Rule 16 sanction already imposed by the Tribunal for the same conduct. The purposes of the relevant legislation are another relevant consideration in the Tribunal’s exercise of discretion, but the parties have not provided any arguments regarding how awarding costs would be consistent with the conservation or protection of the environment or facilitate the implementation of s. 100.1 of the EPA. Given the lack of demonstrated prejudice to the TSSA or Thompson Fuels caused by the Gendrons’ conduct, or course of conduct, and dearth of submissions on how an award of costs would be consistent with the purposes of the EPA and s. 100.1, the Tribunal finds that this is not an appropriate case for it to exercise its discretion to award costs. In light of this finding, it is unnecessary to address whether the Gendrons provided proper evidence regarding their financial circumstances, recognizing that financial constraints being faced by a party against whom costs are sought can be relevant to the Tribunal’s exercise of discretion on costs.

Conclusion

64The Tribunal finds that the TSSA and Thompson Fuels have not satisfied the second step of the three-step process for determining costs as set out in Baker and dismisses their applications for costs. There is no need for the Tribunal to address the third step in the Baker analysis.

65The Tribunal also notes that the main decision in this proceeding was issued on June 30, 2016. In respect of the main proceeding (as opposed to the specific motion at issue in these reasons), the Tribunal did not receive any applications for costs within 30 days of June 30, 2016 under Rule 216. However, at some points in this proceeding parties sought costs against each other in respect of other motions. One request for costs was disposed of in the Tribunal’s February 13, 2013 order but other requests were not finally disposed of and were left to the conclusion of the proceeding for determination (see para. 43 of the Tribunal’s February 12, 2015 Order and para. 39 of the Tribunal’s January 22, 2016 Order). Given the lack of requests for costs within 30 days of the June 30, 2016 decision and the limited evidence and submissions provided for those previous costs requests that have not been disposed of, the Tribunal finds that this is not a case where costs should be awarded. No party, for any stage of this proceeding, has brought forward sufficient evidence and submissions to warrant a costs award for any stage of the proceeding. With the release of the decision on the merits on June 30, 2016 and the within final disposition regarding costs, the Tribunal’s file in this proceeding is now closed.

ORDER

66The Tribunal dismisses the applications for costs brought by the TSSA and Thompson Fuels.

67No costs are awarded for any stage of the proceeding.

Applications for Costs Dismissed

“Jerry V. DeMarco”

JERRY V. DEMARCO

ASSOCIATE CHAIR

“Hugh S. Wilkins”

HUGH S. WILKINS

MEMBER

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