Alex Krek v. Director, Ministry of the Environment and Climate Change, 2017 CanLII 18331

minicounsel

Environmental Review Tribunal

Tribunal de l’environnement

March 31, 2017

14-039

PROCEEDING COMMENCED UNDER section 140(1) of the Environmental Protection Act, R.S.O. 1990, c. E.19, as amended

Appellant:

Alex Krek

Respondent:

Director, Ministry of the Environment and Climate Change

Subject of appeal:

Order issued under sections 157.3(5)(b) and 157.3(6) of Environmental Protection Act to retain a consultant to prepare and complete all specified work respecting assessment and remediation of petroleum impact on ground water from a spill

Reference No.:

6527-9HBQB9-DO

Property Address/Description:

1033 Bayview Point Road

Municipality:

Lake of Bays

Upper Tier:

Muskoka

ERT Case No.:

14-039

ERT Case Name:

Krek v. Ontario (Environment and Climate Change)

Heard:

In writing

APPEARANCES:

Parties

Counsel/Representative^+^

Alex Krek

Dennis O’Leary

Dieter Knoppke

John Buhlman

Thomas and Ingeborg Sickinger

John Sickinger^+^

Director, Ministry of the Environment and Climate Change

Sylvia Davis

1This order of the Environmental Review Tribunal (“Tribunal”) relates to two applications for costs.

Background

2On May 6, 2014, the Director, Ministry of the Environment and Climate Change (“MOECC”) issued Director’s Order No. 6527-9HBQB9-DO (“Director’s Order”) requiring Alex Krek (“Appellant”) to assess and remediate petroleum impact on ground water from a spill that took place in 1990 on his property, located at 1033 Bayview Point Road, Dorset, Lake of Bays in the District Municipality of Muskoka, Ontario (“Site”). The Director’s Order upheld a Provincial Officer’s Order issued by Provincial Officer John Kaasalainen on April 23, 2014 (“2014 PO Order”). The Appellant appealed the Director’s Order to the Tribunal. A number of individuals requested and were granted party status, including Dieter Knoppke, who owns the property abutting the Site to the north, and Thomas and Ingeborg Sickinger (“Sickingers”), who own two properties to the south of the Site. Between the Sickinger properties and the Site are two further properties, belonging to the Klein and Fischler families.

3Mr. Krek’s appeal was never heard on its merits. Several occurrences delayed the hearing; all parties consented to participate in Tribunal-led mediation for a period of time, and two adjournments were granted on request of the Director in order to conduct further sample testing (see the Tribunal’s reasons for adjournment in its order issued on October 26, 2015, Krek v. Ontario (Ministry of the Environment and Climate Change), [2015] O.E.R.T.D. No. 48).

4There are wells on the Krek property, the Knoppke property, and one of the Sickinger properties (“Sickinger Well”), which have been tested for contamination and monitored over the years since the 1990 spill. The Sickinger Well at 1027 Bayview Point Road is the only well on either of the Sickinger properties. It was drilled by Mr. Knoppke in 1998 to temporarily supply his cottage while he was remediating his own property. It was found to be contaminated with hydrocarbons shortly thereafter.

5In July of 2016, the Director filed a Notice of Revocation of the Director’s Order against Mr. Krek. After hearing submissions by the parties and the participant Henry Fischler, the Tribunal accepted the proposed revocation and the appeal was dismissed on September 8, 2016 (See: Krek v. Ontario (Ministry of the Environment and Climate Change), [2016] O.E.R.T.D. No. 40 (“Revocation Decision”)).

6Counsel for the Director explained the reasons for the revocation in her submissions on the revocation motion, as follows:

The Director has received evidence that the well on the Sickinger property has been tampered with, in that fuel oil has been added to the well by a third party, thereby invalidating samples taken from that well. There is evidence that this tampering has been ongoing and as such all samples taken from the Sickinger well are now suspect. The Director has obtained an order from the Ontario Court of Justice securing the wells on the Krek, Knoppke and Sickinger properties from all but MOECC staff. Over the next several months, the MOECC will work with the impacted property owners to determine next steps.

7According to evidence filed in support of that motion, the Sickingers suspected tampering with the well on their property and installed hidden video equipment. It recorded an individual apparently tampering with the well on their property on September 27, 2015. The Sickingers notified the MOECC of this occurrence in October 2015 and provided the Director with a copy of the video recording.

8The Director then requested the MOECC Strategic Enforcement and Intelligence Unit (“SEIU”) to install surveillance cameras on the Krek Site and Sickinger properties. The SEIU installed hidden video cameras at the Sickinger properties located at 1025/1027 Bayview Point Road and at the Krek Site in January 2016. In early June 2016, the Director reviewed videographic evidence from the SEIU cameras that showed Mr. Knoppke pouring a red liquid into the Sickinger Well on May 16, 2016. In addition, MOECC Legal was provided with a report from Ralph Ruffolo of the MOECC Laboratory Services Branch, dated June 21, 2016 (“Lab Report”). The Lab Report compared well water samples taken in 2016 with samples that had been taken in 2014 and 2004. It reported that the results indicated a secondary, “fresher” (less weathered) source of contamination for the 2016 samples.

9As a result of this new information, the MOECC obtained an order from the Ontario Court of Justice on June 16, 2016 to secure the wells on the Krek, Sickinger and Knoppke properties.

10As noted above, the Tribunal revoked the Director’s Order against Mr. Krek on September 8, 2016. A new Provincial Officer’s Order (“2016 PO Order”) and, thereafter, a 2016 Director’s Order were subsequently issued against Mr. Knoppke. Those orders are not part of this proceeding.

11Two applications were filed for costs against Mr. Knoppke, in accordance with the Tribunal’s Rules of Practice (“Rules”), by Mr. Krek and the Sickingers. The applications were heard in writing. The Director took no position on the costs applications, but made submissions in reply to Mr. Knoppke’s submissions in this costs application relating to videographic evidence.

Issue

12The main issue is whether Mr. Knoppke should be ordered to pay costs to Mr. Krek and to the Sickingers arising from the appeal of the Director’s Order.

13In making its findings on the costs applications, the Tribunal also addresses the following preliminary issues:

Whether to admit video footage of the Sickinger Well from May 14, 2016, the date Mr. Knoppke alleges to have bailed that well; and
Whether Mr. Knoppke bailed the Sickinger Well on May 14, 2016.

Relevant Legislation and Rules

14The relevant provisions of the Statutory Powers Procedure Act (“SPPA”) and the Rules are attached as Appendix “A” to this order.

15For appeals such as this one under the Environmental Protection Act (“EPA”), costs may only be awarded by the Tribunal to reimburse “reasonable and eligible expenditures” (Rule 212). In this case, costs can only be awarded if there has been improper conduct by a Party pursuant to s. 17.1 of the SPPA and Rules 225 and 226. Specifically, Rule 225 provides that the Tribunal must find that the “conduct or course of conduct of a Party has been unreasonable, frivolous or vexatious or… a Party has acted in bad faith.” Rule 212 outlines the objectives of the cost rules, namely, 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.

Discussion, Analysis and Findings

Outline of the Parties’ Positions

Discussion, Analysis and Findings

16In an affidavit filed with his responding submissions, dated September 28, 2016, Mr. Knoppke acknowledges that he poured fuel oil into the Sickinger Well on May 16, 2016. However, he stated that although his actions on May 16, 2016 were a mistake, they were not fraudulent, unreasonable, frivolous, vexatious, or in bad faith. Mr. Knoppke states that he simply poured the same fuel oil into the well that he had bailed from it two days earlier, on May 14, 2016.

17Mr. Knoppke and the Sickingers submit that Mr. Knoppke’s actions on May 16, 2016 warrant an adverse costs award because they constitute unreasonable, frivolous and vexatious conduct and were motivated by bad faith. They further submit that Mr. Knoppke’s explanation in this costs application for his actions on May 16, 2016 is false, adding to the improper conduct leading to a costs award; they allege that he has tampered with wells on other occasions and therefore his actions have caused all amounts spent on this appeal to have been “thrown away”.

18In determining whether Mr. Knoppke’s conduct falls within that described in the Tribunal’s rules as a pre-condition to a costs award, the Tribunal first addresses the disputed factual question of whether Mr. Knoppke was returning fuel oil that he bailed from the Sickinger Well on May 14, 2016. In answering this question, the Tribunal will address Mr. Krek’s objection to the video footage from May 14, 2016.

Mr. Knoppke’s Submissions

19Mr. Knoppke submits that Mr. Krek’s application for costs should be dismissed for three reasons: (i) his conduct was explainable and not unreasonable, frivolous or vexatious; (ii) the Director’s Order did not need to be revoked due to tampering on May 16, 2016, as the underlying need to delineate contamination from 1990 remains; and (iii) his actions on May 16, 2016 were outside the appeal “proceedings” and therefore cannot be grounds for a costs award.

20Similarly, Mr. Knoppke submits that the Sickingers’ application for costs should be dismissed because it also makes the assumption that the Director’s Order was issued in 2014 after tampering, which he states is not the case. In addition, Mr. Knoppke submits that costs awards are to reimburse parties for legal representation, but the Sickingers were not represented by counsel throughout the proceedings. He further submits that a number of the costs items claimed by the Sickingers are for matters outside the appeal proceedings and therefore should not be granted, including video for security of their property, mediation meetings, and video recordings from April 1 to July 31, 2016.

21With respect to the nature of his conduct, Mr. Knoppke argues that pouring the bailed fuel oil back into the well on May 16, 2016 was not unreasonable, frivolous, vexatious or in bad faith. He states that he bailed the material from the Sickinger Well on May 14, 2016, and that he was mistaken in returning it but did so because he did not want to keep it in his garage, and so that later MOECC sampling of the well would be accurate.

22Mr. Knoppke filed an affidavit to support his submissions. He explains in paragraph 6:

Because I was not provided with a duplicate sample on May 13, 2016, I decided to take samples from the Sickinger well and bail any free product (oil floating on the surface of the water in the well) in the well to measure the amount of free product. I attended at the Sickinger Well on Saturday, May 14, 2016 to bail the oil out of the Sickinger Well. I put the bailed liquid into a bucket which I then took to my garage on my Property to allow the oil to separate from the water. I retrieved approximately 1 litre of oil and 4 litres of water from the Sickinger Well. After the oil separated from the water, I poured the oil into one container and the water into another.

23He then explains his attempt to dispose of the oil at the Dwight Transfer Station, which he states would not take contaminated material:

I reviewed the (Household Hazardous Waste) web page, and learned that the material would only be accepted on specific dates, the first of which for the Dwight Transfer Station was not until sometime in early June. Since I was leaving Ontario for Germany on May 19, 2016 and I did not want to leave the oil in my garage, I decided to pour the oil and water back into the Sickinger Well, which I did on May 16, 2016. I only poured the material I had bailed from the Sickinger Well into the Sickinger Well.
I knew the MOECC was scheduled to return the following week to sample and bail the wells again. I reasoned that putting the oil and water back into the well from which I bailed it would allow the MOECC to also properly measure the amount of free product and also dispose of it.

24Mr. Knoppke attached to his affidavit a copy of a “memo to file” dated May 17, 2016, which he stated he composed on a computer at a local public library to document the occurrence and put in his spill file.

25Mr. Knoppke submits that the video recording of May 14, 2016, filed by Mr. Krek in responding submissions, should not be entered into evidence because he was not provided with full disclosure of the make, model and location of the equipment, by the Director.

26Mr. Knoppke’s second argument is that the costs applications have been brought as a result of the Director’s decision to revoke the Director’s Order, which Mr. Knoppke did not oppose. He states that “the consequences of the Director’s decision to revoke the Order, when the foundation for issuing the Order in the first place still exists, should not be visited on Mr. Knoppke.” He submits that his actions of May 16, 2016 do not change the underlying need to delineate the 1990 spill, which was the subject of the Director’s Order. He submits that there was and still is ample evidence to support the Director’s Order, and that it therefore did not have to be revoked. Mr. Knoppke submits that the “fundamental and erroneous assumption” in the applications is that Mr. Knoppke contaminated wells prior to 2014 thereby leading to the issuance of the 2014 PO Order and then the Director’s Order. He submits that any allegations in this regard are speculation, not founded on evidence, and should be rejected outright.

27Mr. Knoppke’s third argument is that the Tribunal’s costs rules only apply to a party’s actions during the proceeding, and that his actions on May 16, 2016 were not part of a hearing and therefore cannot be the basis of a costs award. In this regard, he relies on the definition of “unreasonable conduct” in Baker v. Ontario (Ministry of the Environment), [2009] O.E.R.T.D. No. 55 (“Baker”). In Baker, at para. 91, the Tribunal framed the inquiry as “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.”

Mr. Krek’s Submissions

28Mr. Krek submits that it was Mr. Knoppke’s “unlawful and fraudulent conduct” that called into question the current and past test results of the various wells that have been sampled over the years. Mr. Krek submits that there is no question but that Mr. Knoppke’s motivation was “his intent to deceive the MOECC, the Parties and, by extension, the ERT by manipulating and manufacturing false fuel oil results at the various wells in a fraudulent and unlawful course of action, intending to cause Mr. Krek harm.” He therefore requests costs “in the elevated substantial indemnity sum of $311,781.48,” in accordance with Rule 225. Alternatively, he requests costs in the sum of $245,913.95 as per the Tribunal Maximum Rate set out in Rule 229.

29Referring to an affidavit sworn by Provincial Officer Kaasalainen in July 2016 (“July 2016 Kaasalainen Affidavit”), included in the Director’s motion to revoke, and to Mr. Kaasalainen’s Provincial Officer’s Report of August 17, 2016 (“2016 PO Report”), Mr. Krek submits that Mr. Knoppke “appears to have contaminated wells on each of the Krek, Knoppke, and Sickinger properties.” Mr. Krek submits Mr. Knoppke’s actions were a result of an “improper motivation”, as required for a finding that the conduct was vexatious or in bad faith. He notes that, despite having received $750,000 in 1997 in settlement of the civil suit against Mr. Krek, Mr. Knoppke commenced an action on December 4, 2015 against both Mr. Krek’s property liability insurer, Unifund, and Her Majesty the Queen in Right of Ontario, claiming damages of $4 million with respect to Unifund and MOECC’s alleged negligence in responding to the spill.

30Mr. Krek submits that the issuance of the Notice of Revocation by the Director and the subsequent 2016 PO Order to Mr. Knoppke demonstrate that, had the MOECC previously been aware of Mr. Knoppke’s conduct, the 2014 PO Order and the Director’s Order would not have been issued to Mr. Krek.

31Mr. Krek submits that Mr. Knoppke made false statements in his response to this costs application, which is a further instance of bad faith conduct, giving rise to costs. Mr. Krek provided evidence to counter Mr. Knoppke’s explanations for his conduct in pouring fuel oil into the Sickinger Well. Regarding Mr. Knoppke’s statement that he bailed the Sickinger Well two days earlier, on May 14, 2016, Mr. Krek notes that at least four individuals have expended the necessary time to review footage for May 14 and 15, 2016 from both SEIU video cameras. Specifically:

Pavle Levkovic, law student at Aird & Berlis (counsel to Mr. Krek);
Joslyn Currie and Daniel Carens-Nedelsky, law students at MOECC; and
Doug Knight, MOECC SEIU intelligence officer.

32Mr. Krek filed documents confirming that none of the four reviewers identified any individual on video approaching the Sickinger Well on those days. Counsel for Mr. Krek also included a copy of the video footage from May 14, 2016 on a USB stick in his costs materials, stating it was “available for the Tribunal to review if it so desires.”

The Sickingers’ Submissions

33The Sickingers submit that the sampling results of the Sickinger Well were the “main underpinning” of the Director’s Order against Mr. Krek, and were also critical to this appeal before the Tribunal. They submit that the costs they incurred to discover the well tampering, therefore, were necessary and “significantly saved costs and time for all Parties, including the MOECC and the ERT” because they led to the revocation of the Director’s Order.

34The Sickingers submit that Mr. Knoppke’s actions were deliberate, malicious and self-serving. They submit that his conduct was vexatious in not only contaminating the Sickinger Well but also knowingly tampering with evidence. They point out that he is aware from his own lawsuit against Mr. Krek that furnace oil is carcinogenic, and that “having free phase contaminants in a well on a property makes that property impossible to sell or to mortgage,” and significantly devalues a property. They submit that Mr. Knoppke knew the Sickingers suffered physically and mentally due to consequences of furnace oil contamination of their well, and that they depended on the properties to fund their retirement.

35With respect to legal representation, the Sickingers submit that “two elderly seniors should not be penalized for having minimized their costs by seeking legal advice (rather than being fully represented at each stage of the ERT proceedings), in order to be well-prepared for teleconferences, comply with the ERT’s Orders and where necessary produce submissions.”

36The Sickingers ask for their legal costs as well as reimbursement of expenses for attending the MOECC well testing events, and setting up the video surveillance equipment. The Sickingers ask for an order awarding them all costs in the sum of $24,174.65 or, in the alternative, the sum of $17,237.00 which represents the Maximum Rate under Rule 229.

The Director’s Submissions

37The Director’s only involvement in this costs application was to respond to Mr. Knoppke’s submission that the video footage of the Sickinger Well on May 14, 2016 should not be accepted in evidence, and his request that the Tribunal order the Director to provide further information in that regard.

38The Director filed a copy of email correspondence with Mr. Knoppke’s counsel to demonstrate that the video footage, and information relating to its procurement, was provided. The Director submits that the make and model of the equipment, as well as its precise location, should not be subject to a Tribunal disclosure order due to investigation privilege. The Director submits that Mr. Knoppke does not require the requested information in order to challenge the reliability of the recordings, arguing that he could do so based on other evidence such as power outages or gaps in recording time, if any had occurred. The Director submits that the video recordings are entirely reliable.

The Legal Test

39The relevant test for costs is set out in s. 17.1 of the SPPA as elaborated upon by the Rules and involves a three-step analysis, as described in Johnson v. Ontario (Ministry of Environment), [2006] O.E.R.T.D. No. 20 (“Johnson”) at paras. 22 to 24. First, the Tribunal determines the threshold issue of whether a party has engaged in unreasonable, frivolous or vexatious conduct or acted in bad faith. If there is such a finding, the second step is to consider whether it should award costs in the particular circumstances, since the Tribunal is not bound to order costs. The third step is determining the amount of costs and to whom they should be paid.

Preliminary Issues

Whether Video Footage from May 14, 2016 should be Admitted, or Further Disclosure should be Ordered

Preliminary Issues

40Mr. Knoppke objects to the admission of MOECC’s video footage of the Sickinger Well from May 14, 2016 on the basis that the Director did not provide all of the forensic information that he requested. Mr. Knoppke requests that the Tribunal not admit the video footage from May 14, 2016, or in the alternative order the Director to provide “full disclosure of the equipment, files and metadata” relating to the video footage from that day.

41The Director submits that no disclosure should be ordered because:

a. full disclosure already occurred on August 25, 2016;

b. the only information that has been withheld from Mr. Knoppke (i.e. the make and model numbers of the video equipment used and the locations where the equipment was placed) should not be disclosed as it is subject to public interest “investigation privilege”; and

c. there is no procedural unfairness to Mr. Knoppke by denying him this information as no evidence was provided as to why the make and model numbers or the locations of the video equipment are required to perform the forensic examination that he claims that he wishes to perform.

42Mr. Knoppke provided no evidentiary basis to support any alleged concerns. Indeed, he did not specify what concerns he had with the validity of the recordings, nor did he explain how concealing the make and model number would cause him any unfairness.

43In the process of determining the admissibility of the video evidence, this panel of the Tribunal made an additional interim order (communicated to the Parties by email on December 6, 2016) with respect to a request by Mr. Knoppke for an opportunity to question Mr. Knight, MOECC SEIU Intelligence Officer.

44The background to that interim order is as follows. The Director submitted an affidavit from Intelligence Officer Knight in response to Mr. Knoppke’s request for a disclosure order. In his affidavit, Intelligence Officer Knight described his involvement in the matter and his observations of the video footage. Mr. Knoppke requested an opportunity to “cross examine or question Mr. Knight” on matters that “relate to a power outage on May 14, 2016, and the effect on the video equipment”. It should be noted that apart from this phrase in the request from counsel for Mr. Knoppke, there is no evidence before the Tribunal, or suggestion by any party, that there was a power outage on May 14, 2016. To the contrary, Intelligence Officer Knight swore, at para. 19 of his affidavit, that there were “no gaps in coverage”.

45The Tribunal denied Mr. Knoppke’s request for an opportunity to question Intelligence Officer Knight, finding that the proposed questions, coming after submissions had been made on the costs applications, were not relevant to the Director’s submissions, which related to the make and model number of the video equipment and their locations. The Tribunal’s email of December 6, 2016 read:

It will be recalled that the Director takes no position on the costs motion, but filed Mr. Knight’s affidavit and made submissions on the following request raised by Mr. Knoppke in his reply submissions: for an order requiring the MOECC to provide Mr. Knoppke with the make and model numbers of the video equipment and their locations.

In her responding materials to Mr. Knoppke’s submissions, Ms. Davis addressed two issues:

Has MOECC’s refusal to provide to Mr. Knoppke the make, model numbers and locations of the video equipment caused any unfairness to Mr. Knoppke? And
Should the Tribunal order MOECC to provide the information to Mr. Knoppke?

Mr. Knoppke, through his counsel Mr. Buhlman, has not satisfied the Tribunal that a cross-examination of Mr. Knight will be relevant to the issues addressed by Ms. Davis.

The request for additional time to cross-examine Mr. Knight is denied.

46The Tribunal dismisses Mr. Knoppke’s request to exclude the May 14, 2016 video footage. Mr. Knoppke has provided no basis to impugn the reliability of either the video footage, or the evidence of those who reviewed it. Intelligence Officer Knight swore to the chain of custody and quality of the video recordings; points that were not in dispute.

47The Tribunal also dismisses Mr. Knoppke’s request, made in the alternative, for a Tribunal order that the Director provide full disclosure of the equipment, files and metadata. No basis has been provided that such information is necessary for Mr. Knoppke to test the reliability of the video footage. For these reasons, it is unnecessary to address the Director’s additional submissions that the requested camera information is subject to investigation privilege.

Factual Findings

48In order to determine whether Mr. Knoppke’s admitted actions on May 16, 2016 were unreasonable, frivolous, vexatious or in bad faith, the Tribunal must first make a number factual findings. The Tribunal will address Mr. Knoppke’s explanations for his May 16, 2016 actions in turn.

i) Whether the Fuel Oil Poured into the Sickinger Well was Previously Bailed out of that Well on May 14, 2016

Whether the Fuel Oil Poured into the Sickinger Well was Previously Bailed out of that Well on May 14, 2016

49Mr. Knoppke acknowledges that he poured fuel oil into the Sickinger Well on May 16, 2016 but argues the action was not unreasonable, frivolous, vexatious or in bad faith, in part because he bailed the material from the Sickinger Well on May 14, 2016.

50While the Tribunal found above that the USB drives with video footage from May 14, 2016 are admissible, the Tribunal has nonetheless not reviewed the raw video footage itself. Rather, the Tribunal has taken the more expeditious route of basing its findings on the memoranda and affidavits filed by those who took the time to view the many hours of video footage.

51There is no disagreement that the recordings from the two video cameras on May 14, 2016 do not show Mr. Knoppke, or anyone else, approaching the Sickinger Well that day. While Mr. Knoppke appears to suggest that there may be gaps in the footage due to a power outage (although the suggestion is not made explicit), he does not state that he believes the recording to contain gaps, or when such gaps may have occurred; nor does he indicate what time of day he alleges to have bailed the well. Mr. Knoppke could have provided his own evidence of a power outage, if he believed one to have taken place on May 14, 2016. It would be an exceedingly poor use of the Tribunal’s time to review at least 24 hours of video footage, in order to confirm what all parties already agree shows no-one tampering with the Sickinger Well.

52The Tribunal accepts that Mr. Knoppke does not appear in the video footage of the Sickinger Well from May 14, 2016. This is one of several pieces of evidence leading to the conclusion that Mr. Knoppke did not bail the Sickinger Well on May 14, 2016. The Tribunal now turns to the other evidence before it.

53Mr. Knoppke included a one-page print-out of a personal “Memo to File”, which he states he wrote on a computer at the local library on May 15, 2016 and saved to a USB drive, detailing his bailing of the Sickinger Well on May 14, 2016. The Tribunal places no weight on this document. In it, Mr. Knoppke refers to calling his experts on May 13, 2016 before allegedly bailing the Sickinger Well, but on cross-examination he confirmed that he did not call any experts. There is no objective evidence to support the alleged date on which the Memo to File was written, as Mr. Knoppke states he cannot locate the USB drive. In addition, the Memo to File refers to an “installed security camera” on the Sickinger property, which implies that Mr. Knoppke was aware of the video equipment prior to adding fuel oil to the Sickinger Well on May 16, 2016. Ralph Sickinger confirmed in his affidavit of September 16, 2016 however, that he never informed Mr. Knoppke of the video surveillance of the Sickinger Well, and that his elderly father, Thomas Sickinger, was unaware of the existence of the equipment. Mr. Knoppke made it clear in his motion to strike the video evidence from May 14, 2016 that he was never made aware of the location of the hidden cameras. On a balance of probabilities, the Tribunal finds that Mr. Knoppke was unaware that the Sickinger Well was being videotaped until after the SEIU removed its equipment on May 16, 2016 − the day after the Memo to File was allegedly written.

54Further, the monitoring and sampling undertaken by MOECC on May 13, 2016 measured four cm of free product in the Sickinger Well using an oil/water interface probe. Provincial Officer Kaasalainen noted at para. 19 of his July 2016 Affidavit that “there was not enough free product found in the wells located on the Krek property or in the Sickinger Well to obtain a representative sample” on May 13, 2016. It is therefore entirely implausible that Mr. Knoppke was able to bail one litre of fuel oil from the Sickinger Well the next day, as alleged.

55Mr. Knoppke’s claim to have bailed the Sickinger Well on May 14, 2016 also raises inconsistencies relating to his access to the well. Mr. Knoppke swore an affidavit on September 2, 2016 for purposes of a Mareva injunction motion (before the Ontario Superior Court), included in Mr. Krek’s costs materials, stating that he did not have a key to the Sickinger Well. When asked, during cross-examination on his affidavit in this costs application, how he was able to access the well on May 14, 2016 if he didn’t have a key, Mr. Knoppke stated that the MOECC staff must have left the well unlocked after the sampling event on May 13, 2016 because they left in “such a rush”.

56However, Mr. Krek filed an affidavit from Matt McNeice, MOECC Field Staff, dated October 3, 2016, confirming that the Sickinger Well was securely locked both before and after sampling on May 13, 2016. He stated that Provincial Officer Kaasalainen unlocked the Sickinger Well prior to sampling, and Mr. McNeice locked it immediately after. Photographs of the procedure were attached to the affidavit to confirm this evidence. Mr. Knoppke’s claim that the well was unlocked is contrary to Mr. McNeice’s testimony and photographic evidence, and contrary to his own allegation of having bailed the well on May 14, 2016, and the Tribunal rejects it.

57The Tribunal finds, on a balance of probabilities, that the fuel oil that Mr. Knoppke acknowledges he poured into the Sickinger Well on May 16, 2016 was not previously bailed from that well on May 14, 2016.

ii) Whether Mr. Knoppke saw Consultants Throw Bailed Oil Back into the Well in the Past

Whether Mr. Knoppke saw Consultants Throw Bailed Oil Back into the Well in the Past

58Mr. Knoppke alleges that he has seen consultants from Briggs Environmental (“Briggs”) and Jacques Whitford Environmental Consultants (“JW”) throw contaminated samples back into the well they were taken from, in the past. For this reason he submits his conduct was not unreasonable.

59In reply, Mr. Krek filed two affidavits sworn by professional geoscientists involved in the clean-up of the 1990 spill. Eric Veska is a principal of Environmental Services of Stantec Consulting Ltd. (formerly JW), whose company has been retained by Mr. Krek through his counsel since early 2007. Mr. Veska stated that Mr. Knoppke’s statements in this regard are utterly false and supports his conclusion with the following:

the first step in remediation is to remove the contaminant from the environment;
it would be a direct contravention of Stantec’s and JW’s technical protocols to return a contaminant to a well;
none of the people involved or present at the sampling events corroborates Mr. Knoppke’s allegations or would have permitted it to take place;
the deposit of a contaminant into a water well would be contrary to the EPA and the duties and obligations of a professional geoscientist and would be grounds for discipline, and potentially revocation of the geoscientist’s licence; and
Mr. Veska notes that Mr. Knoppke has been present at many sampling events and observed the careful transfer and storage of contaminants bailed from wells, which were stored in a shed on the Krek Site until a licensed waste haul disposal company was hired by Mr. Krek to dispose of it lawfully at a hazardous waste facility.

60Rick Greely, a professional geoscientist working with Briggs in the mid-1990s, also swore an affidavit that at no time did anyone from Briggs return fuel oil to a water well as alleged by Mr. Knoppke. He lists the same professional reasons as Mr. Veska, and adds that, in any event, there was no fuel oil to return to any of the wells at the Krek Site because fuel oil product had not been recovered by the Briggs’ Treatment System from the ground water obtained at the Krek Site.

61The Tribunal accepts and relies upon the affidavits sworn by Mr. Greely and Mr. Veska. Their evidence is consistent with obligations on professional geoscientists, with one another, and is both logical and impartial. Mr. Knoppke’s statements, on the other hand, have no evidentiary support and suggest improper conduct by professionals who have no reason to do so.

iii) Whether Urgent Disposal was Required

Whether Urgent Disposal was Required

62Mr. Knoppke alleges that he returned the fuel oil to the Sickinger Well because he was leaving for Germany in short order and did not want to leave the oil in his garage. He alleges that he called the Dwight, Ontario transfer station but was told hazardous material could not be accepted there. The Tribunal finds this explanation to be implausible and unpersuasive. First, Mr. Knoppke admitted on cross-examination that he has kept other oil in his garage for approximately four years, allegedly purged from wells on his property, the Krek Site and the Sickinger properties. There is no explanation as to why Mr. Knoppke felt he had to dispose of this one alleged sample immediately. Further, Mr. Krek filed unchallenged evidence that even if the Dwight transfer station would not accept hazardous material, the Bracebridge hazardous waste facility, which was on Mr. Knoppke’s route to the Toronto airport, would have done so.

iv) Whether May 16, 2016 was the Only Occasion of Well Tampering

Whether May 16, 2016 was the Only Occasion of Well Tampering

63Mr. Knoppke states that he only poured fuel oil into one well (the Sickinger Well) on one occasion (May 16, 2016). However, his statements are contradicted by other evidence. The Tribunal finds for the following reasons, on a balance of probabilities, that Mr. Knoppke’s well tampering was not limited to the one event caught on video camera on May 16, 2016.

64In the Director’s Notice of Revocation, dated July 12, 2016, Ms. Davis stated that the Director intended to revoke the Director’s Order after receiving evidence that the Sickinger Well had been tampered with “in that fuel oil has been added to the well by a third party, thereby invalidating samples taken from that well.” Ms. Davis further wrote that there is “evidence that this tampering has been ongoing and as such all samples taken from the Sickinger well are now suspect.” In support of the Director’s conclusion, Ms. Davis filed the July 2016 Kaasalainen Affidavit. These materials are relied upon by Mr. Krek in this costs application. In particular, the following reports were attached to the July 2016 Kaasalainen Affidavit:

Reports by two MOECC hydrogeologists, Myron Zurawsky (dated August 27, 2015, “Zurawsky Report”) and Christopher Munro (dated August 21, 2015, “Munro Report”). These reports cast doubt on the assumption underlying the Director’s Order that the spill from the Krek Site had migrated below the Klein and Fischler properties and contaminated the Sickinger properties. The Munro Report concludes that it is more likely for the free phase fuel oil to migrate to the lake (which it has not done) than to the Sickinger Well, and the Zurawsky Report concludes that the source of contamination at the Sickinger Well is more likely to be a source separate from the spill at the Krek Site (See Adjournment Order dated October 26, 2015, Krek v. Ontario (Ministry of the Environment and Climate Change), [2015] O.E.R.T.D. No. 48 at paras. 5 and 10).
Laboratory report by Ralph Ruffolo, Senior Litigation Scientist, MOECC Laboratory Services Branch (dated June 21, 2016, “Ruffolo Report”). The Ruffolo Report looked at samples from the Krek, Sickinger and Knoppke wells from 2016, 2014 and 2004. The Ruffolo Report concludes as follows:

o 2004: the samples were from “slightly weathered fuel oil and probably similar” (i.e., nC9 to nC22 carbon range);

o 2014: “In 2014, nearly 24 years post incident, samples from the three affected property wells [Krek, Sickinger and Knoppke] showed a reddish free product whose GC-FID profiles are consistent with that of a weathered fuel oil in nC12 to nC22 carbon range” (i.e., nC9 to nC11 carbon range was no longer present, which is consistent with weathered fuel oil);

o 2016: Ten samples were taken over five sampling events in 2016 from the Knoppke, Sickinger and Krek wells. The Report concludes that they are “fairly fresh” and share a common source (i.e., nC9 to nC11 carbon range has returned, which is consistent with a fresher source).

65The Ruffolo Report concludes at p.12 that the 2004 and 2014 sample results were consistent with the spill at the Krek Site in 1990:

When comparing trace obtained in 2014 to those from 2004 it is apparent that some additional weathering has occurred as indicated by the loss of the lighter fraction that is nC9 to nC12 carbon range. This is as expected considering that 10 years have passed between these two sampling events.

66However, the 2016 samples appear to show a new source. The Ruffolo Report states at p. 13:

When comparing traces obtained in 2016 to those from 2004 it is apparent that these products appear to have a similar profile. However when comparing the product characterised in 2016 to those in 2014 we see that the lighter fractions, namely those in nC9 to nC12 carbon range, are present again. This is unexpected if one was to assume that there was a single catastrophic spill event as reported in 1990. It is much more feasible to interpret the reappearance of the light fraction in the latest samples to indicate the potential for a new source to this system. This scenario has been described with one of the leading petroleum forensic geochemist in the United States who agrees with my conclusions.

67Mr. Knoppke argues that the description of the 2014 samples as “weathered” means they are consistent with the 1990 spill, and the suggestion there “might” be a new source for the 2016 samples simply reinforces the fact that sufficient delineation of the 1990 spill has never been done.

68The Tribunal finds, however, that the Ruffolo Report is clear that the 2016 samples are fresher than the 2014 samples, and that “all products in the ten samples collected by MOECC staff in 2016 are from a common source” (at p.7). The Ruffolo Report is not the only piece of evidence in this regard: the Zurawsky and Munro Reports contributed to the MOECC’s decision to install surveillance equipment, and to the Director’s request for an adjournment of the appeal in the summer of 2016.

69The Sickingers were the first to suspect tampering in the well on their property, and in August 2015 installed video cameras. The Sickingers recorded a person they believed to be Mr. Knoppke tampering with the Sickinger Well on September 27, 2015, and showed it to the MOECC. Intelligence Officer Knight states that, because the identity of the person on the Sickingers’ recording was not sufficiently clear, the MOECC Enforcement Unit mounted professional equipment on January 13, 2016 in hidden locations.

70Further, Intelligence Officer Knight was assigned to assist the Barrie MOECC office on November 5, 2015 because “during water testing it was noticed that fresh fuel oil was in the water” (see para. 4 of his affidavit).

71For all of the foregoing reasons, the Tribunal finds, on a balance of probabilities, that Mr. Knoppke’s tampering was not limited to his pouring fuel oil into the Sickinger Well on May 16, 2016. It occurred on more than one occasion, and appears to have included wells on the Krek and Knoppke properties.

Issue No. 1: Whether Mr. Knoppke’s Conduct was Unreasonable, Frivolous, Vexatious or in Bad Faith

72Each of the categories of conduct that may lead to a costs award has been considered in past decisions by the Tribunal. In Johnson at para. 31, the Tribunal found that “unreasonable” conduct is the widest of the categories, and that whether conduct is unreasonable should be considered in the context of the purpose of the EPA, the impact on the other parties and on the Tribunal proceedings. In Baker, the Tribunal stated that an objective measure of what is “unreasonable” is whether the impugned conduct negatively impacts the Tribunal’s ability to conduct the hearing. The Tribunal in Johnson, also at para. 31, described “vexatious” and “bad faith” conduct as having some additional element of improper motivation.

73Even if Mr. Knoppke’s submissions are accepted (which they are not), that his actions on May 16, 2016 were a solitary occurrence and a mistake, the Tribunal finds that his pouring fuel oil into the Sickinger Well on May 16, 2016 constitutes unreasonable conduct. This common sense finding is reflected in the fact that such conduct is prohibited under the EPA. Mr. Knoppke’s actions on May 16, 2016 have led to the laying of criminal charges against him, and have resulted in the Director revoking the Director’s Order against Mr. Krek. Therefore the parties’ efforts and time, the Tribunal’s resources, and the MOECC’s investigatory resources were all unnecessarily expended for this appeal. Mr. Knoppke’s conduct has interfered with the proceeding before the Tribunal, and his conduct was clearly unreasonable.

74Mr. Knoppke’s conduct was not only unreasonable, however. The Tribunal finds there to be evidence that Mr. Knoppke’s conduct was vexatious and in bad faith, for the following reasons.

75Mr. Knoppke did not have permission to access the locked Sickinger Well located on the Sickinger property. The fact that he accessed the Sickinger Well without permission, at least on May 16, 2016 (and also on May 14, 2016 according to Mr. Knoppke’s allegation), indicates an improper purpose, which underlies actions that are vexatious or in bad faith (see Johnson).

76The Sickinger Well was known by Mr. Knoppke to be part of a careful contamination sampling program going back well over a decade, and he therefore knew that tampering would invalidate test results. As outlined in Provincial Officer Kaasalainen’s field notes from the May 13, 2016 MOECC sampling event, Mr. Knoppke was present and observed the careful manner in which the samples are taken and the chain of custody is documented. Mr. Knoppke acknowledges that he knew the MOECC would be testing the Sickinger Well shortly after he poured the fuel oil into it, when he submits on this costs application that he “returned” the oil because he wanted to be sure the MOECC would find it in the well and dispose of it properly.

77Mr. Knoppke also knowingly contributed to the contamination of the Sickinger Well with foreseeable personal impacts on the Sickingers, including stress and loss of property value. One need look no further than Mr. Knoppke’s own experience, as described in his submissions to the Divisional Court in his civil suit against Mr. Krek, that well contamination renders a property “worthless” and “impossible to sell”. Such impacts are also outlined by the Sickingers in their August 2000 lawsuit filed in the Ontario Superior Court against Mr. Krek and Mr. Knoppke. It details damages the Sickingers claimed to have suffered due to contamination of their property, including loss of property value, a potable water supply, and stress.

78In their submissions on this costs application, the Sickingers describe the impacts to them from Mr. Knoppke’s actions in contaminating their well, as follows:

There can be no question that Mr. Knoppke was not aware of the extent of the ramifications of pouring oil into the Sickinger well as the oil in his well ultimately resulted in an award of over $750,000 from Mr. Knoppke’s lawsuit against Mr. Krek. This was significantly higher than the appraised value of his property at the time. He knew, and knows, that putting oil in our well would devalue the Sickinger properties to practically zero as no one would purchase or mortgage the properties. He also knew the Sickingers depended on the properties to fund their retirement. In addition, Mr. Knoppke knew that Mr. Sickinger had very little education (grade 3), was a retired stone worker who had limited funds. Mr. Knoppke also knew that Mrs. Sickinger required three operations on both her shoulders as a direct result from carting water bottles (their only source of potable water), suffers from sleep deprivation, anxiety, and stress; all due to the complications of having a contaminated well on her property. Mrs. Sickinger is 80 years old and is not well. Mr. Thomas Sickinger passed away May 31st, 2016 from liver cancer.

79Further, it appears that Mr. Knoppke stood to benefit financially from continuing fuel oil contamination in the Sickinger Well. Mr. Knoppke filed a $4 million lawsuit against MOECC and Unifund on December 4, 2015 for continuing impacts from the 1990 spill. He may have been partly motivated to do so because he received a $750,000 settlement ($150,000 of which was for remediation) in 1997, in an earlier lawsuit against Mr. Krek.

80The Tribunal finds that Mr. Knoppke contaminated the Sickinger Well with fuel oil on May 16, 2016 with full knowledge of its impact on the reliability of samples from this well, that it would likely harm the Sickingers as property owners, and with potential benefit to himself in his lawsuit against the MOECC and Unifund. As noted above, the Tribunal also finds that May 16, 2016 was not the only time Mr. Knoppke contaminated wells that have been used for ongoing contamination sampling with respect to the 1990 spill. The Tribunal finds that all of these circumstances indicate that Mr. Knoppke’s conduct had in improper purpose and was vexatious and in bad faith.

Issue No. 2: Whether the Tribunal should Award Costs in the Particular Circumstances

81Mr. Knoppke argues that costs should not be awarded because the Director did not need to revoke the Director’s Order and the proceeding could have continued despite his actions. He further argues that his actions of May 16, 2016 were “outside the proceeding” and, therefore, not subject to costs.

Whether the Proceeding Could Have Continued Despite the May 16, 2016 Contamination

82Mr. Knoppke submits that there is no evidence he tampered with any wells prior to the Director’s Order being issued in 2014, and that tampering after 2014 was immaterial to the original Director’s Order, which Mr. Krek had to comply with or appeal in any event. Mr. Knoppke submits that “there was and is ample evidence to support” the Director’s Order, and that Mr. Krek’s conduct of May 16, 2016 “did not justify the revocation of the Order and therefore, does not justify a cost award against him.”

83The Director’s position, evidenced in the Director’s Notice of Revocation, is that the source of the contamination of the Sickinger Well and other wells in the area, as well as the extent of the area contaminated by the 1990 spill, have been thrown into doubt as a result of Mr. Knoppke’s actions. These questions are fundamental to the Director’s Order issued to Mr. Krek.

84In its Decision revoking the Director’s Order, the Tribunal relied upon the Director’s evidence and submissions, which were uncontroverted. In particular, the Director submitted on that motion to revoke that:

85Although Mr. Knoppke submits that there is no evidence before the Tribunal of well contamination prior to the Director’s Order of 2014, the evidence of contamination referred to by the Director in the revocation motion, together with Mr. Knoppke’s proven actions on May 16, 2016, were sufficient to cause the Director to lose faith in all of the samples that underpinned the Director’s Order.

86Whether or not the Director’s Order would have been upheld by the Tribunal could only have been determined upon hearing the appeal. However, the appeal did not proceed and the Tribunal made a final decision in the matter when it accepted the revocation and dismissed the appeal. The Tribunal held at para. 16:

The affidavit evidence filed by the Director is currently uncontradicted. The Tribunal accepts that there is currently no credible evidence that the spill that occurred on Mr. Krek’s property in 1990 is the source of the current contamination at the Sickinger well, and hence that there is no basis for the Director’s Order issued against Mr. Krek and which is the subject matter of this appeal. The Tribunal finds that continuing with an appeal of a Director’s Order that has no credible basis in fact or law is not in the interests of the parties, the participant, or the administration of justice.

87The Tribunal has concluded in the analysis above that Mr. Knoppke’s tampering was not limited to one occasion. There is insufficient evidence before the Tribunal to determine exactly when his tampering began. However, in accepting the proposed revocation of the 2014 Director’s Order, the Tribunal implicitly found that it was reasonable for the Director to conclude that the 2014 Director’s Order against Mr. Krek was insufficiently supported by the evidence, as a result of well tampering. The evidence on this costs application further supports that finding. The Tribunal therefore rejects Mr. Knoppke’s argument that the proceeding could have continued despite the May 16, 2016 contamination.

Whether Mr. Knoppke’s Conduct was “During a Proceeding”

88Section 17.1(1) of the SPPA provides that a tribunal may “order a party to pay all or part of another party’s costs in a proceeding.” Mr. Knoppke argues that cost awards are restricted to improper conduct that occurs in the hearing itself, and submits that his May 16, 2016 actions could not have interfered with the conduct of a hearing and are therefore outside the jurisdiction of the Tribunal for a costs award. The Tribunal disagrees.

89A “proceeding” is defined in Rule 3 as being broader than merely the hearing: “‘proceeding’ includes a Hearing and refers to all matters before the Tribunal in respect of an appeal, application or referral.”

90Mr. Knoppke relies on the Ontario Municipal Board (“OMB”) decision in Richcraft Group of Companies v. Ottawa (City), [2012] O.M.B.D. No. 840 (“Richcraft”) to argue that his actions are not subject to costs because they did not take place during a hearing and were not part of the “proceeding”. In that case, the appellant wrote a letter to the Minister of Municipal Affairs and Housing after the OMB had rendered its decision, complaining that the OMB decision was not fair. On the costs motion, the OMB, at paras. 59 and 60, referred to OMB Rule 102 which provided that costs may be ordered “for conduct at any time during a proceeding”, and held that the letter was not sent during “Board proceedings”:

Whatever Mr. Cooper’s frustrations, these comments to MMAH were uncalled for. If they had been made within Board proceedings, this panel would have had little hesitation in awarding costs on that account.

The difficulty is that they were not made within Board “proceedings”. Rule 102 specifies that the Board only makes a “costs award for conduct at any time during a proceeding [emphasis in original].” Although some Board cases have debated whether this included conduct which provoked proceedings, e.g. SmartCentres Inc. (Toronto Film Studios Inc.) v. Toronto (City), (2011) 85 M.P.L.R. (4th) 330, the Board was shown no authority for the proposition that a letter to a government office – sent after the hearing, to a third party uninvolved in either the appeal or the request under s. 43 – was part of the Board proceedings.

91Here, Mr. Knoppke’s actions took place prior to the termination of the proceedings and is not analogous to the situation in Richcraft. Further, Richcraft does not stand for the proposition Mr. Knoppke asserts, that improper conduct is not compensable if it does not take place in a hearing room. Rather, Richcraft cites the OMB decision in SmartCentres Inc. (Toronto Film Studios Inc.) v. Toronto (City), [2011] O.M.B.D. No. 433, where the OMB concluded at para. 23 that the term “proceeding” is broader than “the hearing on the merits”. The Tribunal finds that Mr. Knoppke’s conduct in contaminating the Sickinger Well is part of the broader “proceeding” before it, despite the fact it did not take place in a hearing room, and as such can be the basis for a costs award.

Application of Tribunal Discretion

92Rule 225 includes a non-exhaustive list of considerations for Tribunal cost awards. The Tribunal finds that Mr. Knoppke’s conduct is akin to consideration 225(i), in that he knowingly created false or misleading evidence for use before the Tribunal.

93In this case, the Tribunal has found Mr. Knoppke’s conduct is not just unreasonable, but also vexatious and in bad faith. One of the purposes of costs awards, as set out in Rule 212, is “to discourage unreasonable conduct.” These are clearly circumstances that merit a costs award.

94Rule 225 also provides that the Tribunal may consider the actions of the party requesting the costs award. Both Mr. Krek and the Sickingers have acted responsibly and efficiently throughout the proceeding, and there are no allegations to the contrary.

95There is little Tribunal jurisprudence relating to costs. It is therefore reasonable to consider cases of other boards and tribunals, including the OMB, keeping in mind that the OMB has broad powers to award costs under s. 97 of the Ontario Municipal Board Act, while the Tribunal’s narrower cost powers arise from s. 17.1 of the SPPA. It is noteworthy that the general principle in OMB Rule 103, that “the Board may only order costs against a party if the conduct or course of conduct of a party has been unreasonable, frivolous or vexatious or if the party has acted in bad faith”, is almost identical to Tribunal Rule 225.

96Mr. Krek refers to Evans v. Vaughan (City), [2016] O.M.B.D. No. 408, where the appellants were found to have presented false and misleading evidence. There, the OMB found that the appellants’ conduct was unreasonable, vexatious and in bad faith, warranting an award of costs against the appellants.

97The Tribunal finds that the outrageous and unique circumstances of this case are such that the Tribunal should exercise its costs powers against Mr. Knoppke.

Issue No. 3: Amount of Costs that Should be Awarded, and to Whom

98Rule 212 provides that a costs award refers to the reimbursement of reasonable and eligible expenditures incurred by a Party for participation in a proceeding before the Tribunal.

99Rule 217 provides that the party requesting costs bears the onus of proving that the costs sought are:

a) directly and necessarily incurred in relation to the proceeding before the Tribunal;

b) reasonable in the circumstances;

c) properly documented and verified; and

d) consistent with the Rules’ principles and criteria.

100Both Mr. Krek and the Sickingers argue that Mr. Knoppke’s conduct was so outrageous as to qualify for a “higher substantial or full indemnity” scale of costs. Mr. Krek cites the OMB decision of Richcraft at para. 42, which describes a hierarchy of conduct that may trigger awards of costs in various amounts:

Partial costs ("costs on a partial indemnity basis") might be awarded for conduct that was "clearly unreasonable"; but if the conduct went beyond "unreasonable", and became (in terminology that originated in the Courts) "reprehensible, scandalous or outrageous", then the Board could consider costs at a higher "substantial" or "full" indemnity basis. Mason cited the following explanatory passage from Wal-Mart Canada Corp. v. Signum Corp., [2004] O.M.B.D. 1234:

(For) clearly unreasonable conduct, the Board must then determine whether this conduct was such that costs should be awarded on a full indemnity basis or on the lesser partial indemnity basis... The Board adopts the test used by the Courts in determining whether a costs award should be made on a substantial indemnity basis: was the conduct of the party against which costs are sought reprehensible, scandalous or outrageous?

"Clearly unreasonable" is not synonymous with any of "reprehensible, scandalous or outrageous".

101However, the source of the Tribunal’s costs powers is s. 17.1 of the SPPA, which is more limited than either the OMB or the Court’s costs powers. The OMB in Richcraft adopted a hierarchy of conduct used by the court in decisions on costs. The Tribunal’s Rules regarding costs, however, do not distinguish between costs for unreasonable conduct and those for frivolous, vexatious or bad faith conduct. The Tribunal must be guided by the objectives of its Rules regarding costs, as set out in Rule 212 and included in the Appendix attached to this Order.

102Despite the discretion provided in Rule 220, Rule 229 establishes maximum levels for legal and consulting fees and disbursements. The Tribunal will consider the costs at the maximum rates under Rule 229.

Mr. Krek’s Costs

103It is uncontested that Mr. Krek’s costs were properly documented and consistent with the Rules’ principles. This analysis will therefore focus on whether the costs are eligible under Rule 212 and Rule 217 paragraphs (a) and (b).

Eligible expenditures for participation in a proceeding

104Mr. Krek includes consultants’ fees for steps taken to comply with the Director’s Order, listed as “Morrison Environmental Costs for provision of alternate drinking water and vapour testing”, and Stantec’s costs to comply with the Order. Mr. Krek submits that the steps he has taken to comply with the Director’s Order, and to comply with the terms of a stay agreement with the Director, are costs incurred in connection with the appeal proceedings. He submits that “had the MOECC been aware of Mr. Knoppke’s conduct previously, the PO Order and Director’s Order would not have been issued to Mr. Krek.”

105Mr. Knoppke, on the other hand, submits that costs necessarily incurred to comply with the Director’s Order are not recoverable. He argues that there is no evidence of well tampering prior to 2014, when the Director issued the Director’s Order against Mr. Krek. Mr. Knoppke submits that he should “not be held responsible for costs because the Director decided to revoke the Director’s Order, when there was ample evidence to support it.”

106The objectives of the costs provisions in part, as set out in Rule 212, are to encourage responsible conduct and discourage unreasonable conduct in proceedings before the Tribunal. The purpose is not to reimburse for remediation work that a party is found, on appeal, not to be responsible for. The purposes of a costs award reflect the Tribunal’s role in this type of appeal under the EPA, which was described at para. 9(vi) in the July 31, 2015 scoping order in this proceeding, as “not to determine fault for a spill but rather, to determine how the environmental protection objectives of the EPA should be fulfilled. See Kawartha Lakes (City) v. Ontario (Environment), 2013 ONCA 310.” Similarly, the purpose of the EPA as set out at s. 3(1) is to provide for the protection and conservation of the natural environment.

107The Tribunal finds that costs incurred by Mr. Krek to comply with the Director’s Order are not recoverable, nor, on the same basis, are legal costs incurred in relation to complying with the Director’s Order.

Reasonableness

108Mr. Krek submits that Mr. Knoppke aggravated the quantum of costs incurred by Mr. Krek in this proceeding through the following actions:

(a) opposing Mr. Krek’s motion for a stay of the Director’s Order;

(b) failing to comply with the Tribunal’s Timetable Order concerning the deadline by which Mr. Knoppke was to make documentary disclosure, thereby necessitating that a motion be brought by Mr. Krek to compel the disclosure; and

(c) opposing the Director’s requests for an adjournment of the appeal, both in September 2015, and again in April 2016, unless certain conditions of the adjournment were imposed on Mr. Krek.

109Mr. Knoppke, on the other hand, submits that Mr. Krek’s claimed fees are excessive and that “at most, one-third of the amount claimed based on the ERT’s maximum rate” should be awarded. He addresses the various categories in Mr. Krek’s claim for costs as follows (as summarized by the Tribunal):

Request for review of PO Order, Notice of Appeal, Notice of Allegation; given counsel’s lengthy involvement in the file, 46 hours is excessive; also includes fees incurred for advising on compliance with the Directors’ Order, which is not recoverable;
Preliminary hearing, party status, issues, adjournments: 218.6 hours is excessive and includes work not related to the appeal;
Mediation: 136.5 hours is excessive when mediation was only one day, also includes ineligible communications relating to compliance with Director’s Order;
Production of Documents: 141.8 hours is excessive and should have been done by more junior lawyers and paralegals;
Witness statements: claim is not excessive;
Payments to experts: all work required by Director’s Order and not recoverable;
Bill of Costs: 40.3 hours is excessive because it should have been done by a clerk and not lawyers;
Disbursements ($6,797.77); there is no way to determine whether photocopying costs are reasonable and no explanation for imaging and scanning costs.

110The Tribunal agrees with Mr. Knoppke that Mr. Krek’s claimed legal fees are excessive, in particular given the overlap between work relating to the appeal of this Director’s Order and numerous other legal proceedings between the parties, including civil actions and a series of previous Director’s orders.

111Similarly, the Tribunal finds that the costs claimed for the production of documents is excessive. Much of the documentary disclosure for this proceeding had already been exchanged by the parties during prior proceedings before both the Tribunal and the Courts. Indeed, counsel commented during the preliminary hearing in this appeal that extensive production had already taken place among the parties.

112The Tribunal finds that Mr. Krek’s costs relating to a site visit are excessive. No site visit took place as part of this proceeding, having been cancelled by the Tribunal panel due to disagreement amongst the parties as to its purpose and who could be present.

113The Tribunal finds that the costs relating to mediation are excessive. This appeal is only one in a series of interactions between the various parties that began 26 years ago, which now include a complex web of various MOECC orders, Tribunal proceedings, as well as Court decisions and settlement agreements. Indeed, one basis for Mr. Krek’s appeal is that Mr. Knoppke’s environmental consultants were given custody of the remediation equipment and all but one of the monitoring wells under an earlier decision by Justice Weekes of the Ontario Court (General Division) (November 3, 1997, Court File no. 92-CQ-20217), thereby making Mr. Knoppke responsible for any remaining spill delineation and clean-up. Tribunal-assisted mediation, as discussed on a TCC with the parties when they agreed to the process, was an attempt to address the complex relationships between the parties as a whole and was not necessarily limited to the issues raised in this Director’s Order under appeal. In addition, the Tribunal finds that Mr. Krek’s claim for $35,747 is excessive for a one-day mediation.

114Mr. Knoppke submits it is appropriate to grant only one-third of the amount requested because it is excessive. However, Mr. Knoppke himself aggravated the costs to some degree by failing to comply with disclosure requirements in a timely way, and objecting to the stay and proposed revocation of the Director’s Order. The Tribunal finds that the costs claimed are excessive and reduces them by half.

115In accordance with the above analysis, the Tribunal grants costs to Mr. Krek as set out below:

Head of Costs Claimed by Krek

Quantum “ERT maximum”

Request for review of Provincial Officer’s Order Notice of appeal Notice of allegation

$13,283

Request for directions; Preliminary hearing; adjournments

$62,495

Mediation

$35,747 (partially eligible; reduced below)

Production of documents

$28,371

Witness Statements

$3,226

Payments to experts (to comply with the Director’s Order)

not eligible

Preparation of Bill of Costs

$8,072

Disbursements

$7,681.40

TOTAL

$158,875.40

TOTAL awarded (one-half of previous total)

$79,437.70

116The Tribunal finds that Mr. Krek has demonstrated pursuant to Rule 217 that the eligible costs, totaling $79,437.70 as outlined above, were directly and necessarily incurred in relation to the proceeding before the Tribunal, reasonable in the circumstances, properly documented and verified, and consistent with the Rules’ principles and criteria.

The Sickingers’ Costs

117There is no objection to the Sickingers’ costs claim under Rule 217(d).

Directly and Necessarily Incurred

118The Sickingers’ request for costs includes $6,586.38 in disbursements to Alarm Pro Muskoka and related expenses for setting up the video monitoring equipment. In addition, it includes mileage for travel from their home in Toronto to their property in Muskoka to install and maintain the equipment.

119Mr. Knoppke submits that the video equipment was not related to the proceedings, and that mileage is only compensable under Rules 218(c) and 229 where it is a disbursement of the lawyer or consultant.

120In reply, the Sickingers’ argue that :

…the sampling results of the Sickinger well was not only the main underpinning of the Order against Mr. Krek, but also the critical element of the ERT hearing. Thus, it is the Sickingers' submission that not only were our costs incurred necessary, but the actions of the Sickingers, which ultimately lead to the revocation of the Krek Order, significantly saved costs and time for all Parties, including the MOECC and the ERT.

121The Tribunal finds that the Sickingers’ installation of the video equipment played a significant role in uncovering Mr. Knoppke’s actions, and was directly related to the revocation of the Director’s Order under appeal. In the circumstances of this case, the Tribunal finds that the Sickingers’ costs relating to the video monitoring equipment were directly and necessarily incurred in relation to the proceeding before the Tribunal.

122There is nothing in the Rules that restricts mileage costs or other disbursements to lawyers and consultants. The Tribunal finds that mileage costs that were directly and necessarily incurred for the proceeding are compensable. Nonetheless, the Tribunal finds that the Sickingers would likely have been travelling to their recreational property on certain occasions even in the absence of the proceeding. In addition, it appears that some of the mileage costs relate to compliance with the Director’s Order, which the Tribunal has found not to be compensable. As a result, the Tribunal will reduce the mileage costs by half.

123As part of their costs claimed, the Sickingers include legal fees for consultations with a lawyer prior to various steps in this appeal. Mr. Knoppke submits that because the Sickingers were not represented by counsel during the hearing events that took place (i.e., preliminary hearing, motions and TCCs), they may not claim legal fees.

124Rule 228 does not restrict “legal and consulting fees” to representation at a hearing event. The fact that the Sickingers sought legal advice while also having a family member represent them in appearances before the Tribunal does not disentitle them to costs for legal fees. The Sickingers have quite properly relied on Richcraft for guidance with respect to self-representation. At para. 70 of that case, the OMB held:

…the Board has held repeatedly that although Board appeals involve no statutory obligation to be represented by counsel (and supported by experts retained for that purpose), there is indeed a formal obligation to come well-prepared.

125The advice sought by the Sickingers for the specific purpose of preparing for their appearances in this appeal cannot be said to be “outside the proceedings” as alleged by Mr. Knoppke. The Tribunal therefore finds that the Sickingers’ legal fees and disbursements relating to this proceeding are recoverable.

Reasonableness

126The Sickingers’ choice in seeking legal advice yet being self-represented at hearing events reasonably minimized their costs while still allowing them to come well-prepared.

127The Sickingers also include reasonable legal fees relating to mediation. However, for the same reasons noted above in relation to Mr. Krek’s claim for costs, the Tribunal finds that the mediation was not focused solely on this proceeding and will only allow half the costs under this head. The Tribunal considers that approximately 10 hours of billed legal work is in relation to the mediation, and therefore reduces the legal costs by five hours (i.e., $290 x 5 = $1450).

128The Sickingers refer to Rules 221 and 223 in their submissions. However, those Rules apply where the Tribunal has broader costs powers, specifically under s. 7 of the Consolidated Hearings Act, s. 21 of the Environmental Assessment Act, s. 20.15 and 33 of the EPA, and s. 7 of the Ontario Water Resources Act. The Tribunal’s wider jurisdiction to order costs under those sections does not apply to this proceeding, which was brought under s. 140 of the EPA. The Tribunal’s limited authority to award costs in this appeal comes from s. 17.1 of the SPPA and is codified in Rule 225.

129Mr. Knoppke submits that the Sickingers’ request for legal costs is not supported by time dockets and invoices “as required by Rule 218(b)”.

130As confirmed in the Sickingers’ reply submissions, the “Bill of Costs” originally submitted was an amalgamation and ordering of the bill forwarded to the Sickingers from their legal counsel. The actual bill from the law firm of Miller Thomson was included as tab 2 in the Sickingers’ reply submissions of October 26, 2016. The Sickingers included copies of receipts of their disbursements relating to video equipment. The Tribunal finds that the costs claimed by the Sickingers were properly documented and verified.

131In accordance with the above analysis, the Tribunal sets out the specific amounts claimed by the Sickingers and granted by the Tribunal for each head of costs they sought, as follows:

Head of Costs Claimed by Sickingers

Quantum “ERT maximum”

Review of Tribunal Rules regarding Party status

$1,764

Review of Krek’s motion for a stay, mediation, and adjournments

$4,317

$1,450 (ineligible mediation) = $2,867

Review of new MOECC reports, videos, Notice of Revocation, and withdrawal

$1,827

Preparation of Bill of Costs

$290

Mileage costs

$1,715.16 x 0.5 = $857.58

Disbursements relating to video equipment

$6,586.38

TOTAL

$14,191.96

Total = $14,191.96

132The Tribunal finds that the Sickingers have demonstrated pursuant to Rule 217 that the eligible costs, totaling $14,191.96 as outlined in the above table, were directly and necessarily incurred in relation to the proceeding before the Tribunal, reasonable in the circumstances, properly documented and verified, and consistent with the Rules’ principles and criteria.

ORDER

Order

133The application for costs by Mr. Krek is granted in part. Mr. Knoppke is ordered to pay costs to Mr. Krek in the amount of $79,437.70.

134The application for costs by the Sickingers is granted in part. Mr. Knoppke is ordered to pay costs to the Sickingers in the amount of $14,191.96

Applications for Costs Awarded in Part

“Heather I. Gibbs”

HEATHER I. GIBBS

VICE-CHAIR

Appendix A – Relevant Legislation and Rules

If there is an attachment referred to in this document,

please visit www.elto.gov.on.ca to view the attachment in PDF format.

Environmental Review Tribunal

A constituent tribunal of Environment and Land Tribunals Ontario

Website: www.elto.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248

Appendix A

Relevant Legislation and Rules

Statutory Powers Procedure Act

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

Rules of Practice

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.
The Party seeking a costs award bears the burden of proof and must demonstrate that any requested costs are:

(a) directly and necessarily incurred in relation to the proceeding before the Tribunal;

(b) reasonable in the circumstances;

(d) consistent with the principles and criteria outlined in these Rules.

When filing a costs application with the Tribunal, the Party seeking a costs award shall provide:

(a) an explanation of how the requirements in Rule 217 (a), (b) and (d) have been met;

(b) a summary statement of hours and fees for each lawyer and consultant, supported by time dockets, invoices and a detailed description of the activity; and

(c) a summary statement of disbursements for each lawyer or consultant supported by corresponding invoices or receipts. Where invoices or receipts are not obtainable for good reasons, the Tribunal may accept a written record of individual disbursements and associated dates.

In its costs decision, the Tribunal may order to whom and by whom the costs are to be paid and fix the amount of the costs. The Tribunal may also direct the scale at which the costs are to be assessed and assign the actual assessment, subject to confirmation by the Tribunal, to a designated person.
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 instances listed in Rule 225 occurs nor does the Tribunal have to find that one of the instances 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.
Eligible expenses that may be recovered through costs include:

(a) legal and consulting fees;

(b) travel and related expenses;

(d) other necessary and reasonable disbursements.

In the table below, the Tribunal has established maximum levels for legal and consulting fees and disbursements. Parties should not assume they will recover all of their disbursements or receive full indemnification for legal or consulting fees through a costs award. The Tribunal may make adjustments based on the criteria outlined in these Rules. Based on the circumstances of each case, the Tribunal will determine the scope of the costs and whether the commencement date for work billed may precede the date of the Notice of Hearing. Costs for preparing and presenting the costs application itself are available only where the Party's costs claim is reasonable.

Established Maximum Levels for Legal and Consulting Fees and Disbursements

Type

Description

Maximum Level

Legal Fees

Senior Counsel (>10 yrs. experience)

$ 290/hr

Intermediate Counsel (5-10 yrs exp.)

$ 230/hr

Junior Counsel (<5 yrs exp.)

$ 170/hr

Paralegal or Articling Student

$ 100/hr

Consulting Fees

Senior Consultant (>10 yrs. experience)

$ 290/hr

Intermediate Consultant (5-10 yrs exp.)

$ 230/hr

Junior Consultant (<5 yrs exp.)

$170/hr

Disbursements

Travel by Automobile

40.00¢/km for southern Ontario 41.00¢/km for northern Ontario

Meals

$40.00/day

Photocopies/facsimile

25¢/copy

The claimable fees and disbursements are based on current rates and updated rates are available from the Tribunal. The cost of hotel accommodation (if the Hearing lasts more than one day) and meals will normally be allowed when the claimant is located more than 99 kilometres from the Hearing site. Reasonable claims for public transit, taxi or airport limousine travel are acceptable. Reimbursements for air and rail travel and reasonable compensation for travel time will be considered when the claimant is located more than 99 kilometres from the site of the proceeding and the attendance of the claimant is necessary.
Unless ordered otherwise, awards of costs shall bear interest in the same manner as those made under section 129 of the Courts of Justice Act.

Background

Issue

Relevant Legislation and Rules

Discussion, Analysis and Findings

Mr. Knoppke’s Submissions

Mr. Krek’s Submissions

The Sickingers’ Submissions

The Director’s Submissions

The Legal Test

Preliminary Issues

Factual Findings

Whether the Fuel Oil Poured into the Sickinger Well was Previously Bailed out of that Well on May 14, 2016

Whether Mr. Knoppke saw Consultants Throw Bailed Oil Back into the Well in the Past

Whether Urgent Disposal was Required

Whether May 16, 2016 was the Only Occasion of Well Tampering

Issue No. 1: Whether Mr. Knoppke’s Conduct was Unreasonable, Frivolous, Vexatious or in Bad Faith

Issue No. 2: Whether the Tribunal should Award Costs in the Particular Circumstances

Whether the Proceeding Could Have Continued Despite the May 16, 2016 Contamination

Whether Mr. Knoppke’s Conduct was “During a Proceeding”

Application of Tribunal Discretion

Issue No. 3: Amount of Costs that Should be Awarded, and to Whom

Mr. Krek’s Costs

The Sickingers’ Costs

Order

Appendix A – Relevant Legislation and Rules

Background

Issue

Relevant Legislation and Rules

Discussion, Analysis and Findings

Mr. Knoppke’s Submissions

Mr. Krek’s Submissions

The Sickingers’ Submissions

The Director’s Submissions

The Legal Test

Preliminary Issues

Factual Findings

Whether the Fuel Oil Poured into the Sickinger Well was Previously Bailed out of that Well on May 14, 2016

Whether Mr. Knoppke saw Consultants Throw Bailed Oil Back into the Well in the Past

Whether Urgent Disposal was Required

Whether May 16, 2016 was the Only Occasion of Well Tampering

Issue No. 1: Whether Mr. Knoppke’s Conduct was Unreasonable, Frivolous, Vexatious or in Bad Faith

Issue No. 2: Whether the Tribunal should Award Costs in the Particular Circumstances

Whether the Proceeding Could Have Continued Despite the May 16, 2016 Contamination

Whether Mr. Knoppke’s Conduct was “During a Proceeding”

Application of Tribunal Discretion

Issue No. 3: Amount of Costs that Should be Awarded, and to Whom

Mr. Krek’s Costs

The Sickingers’ Costs

Order

Appendix A – Relevant Legislation and Rules

Cited By (1 case)

Dallan v. Ontario (Niagara Escarpment Commission), 2018 CanLII 123941

Cited By (1 case)

Dallan v. Ontario (Niagara Escarpment Commission), 2018 CanLII 123941