Court File and Parties

COURT FILE NO.: CV-14-0253 DATE: 2017-02-10

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

BURMET NORTHERN LTD., Plaintiff Michael Harris, for the Plaintiff

- and -

KASHECHEWAN FIRST NATION (formerly Fort Albany Indian Reserve No. 67) and HER MAJESTY THE QUEEN IN RIGHT OF CANADA, Defendants Gannon Beaulne, for the Defendant Kashechewan First Nation Julie Greenspoon, for the Defendant Her Majesty the Queen in Right of Canada

HEARD: By way of written submissions at Thunder Bay, Ontario

Mr. Justice D. C. Shaw

Decision on Costs

[1] On November 22, 2016, I released reasons on a motion by the Crown to strike the statement of claim. Costs of the motion were reserved, pending submissions by the parties. The submissions, in writing, have been received and reviewed.

Background

[2] The plaintiff, Burmet Northern Ltd., is a construction company. It brings an action against Kashechewan First Nation and the Federal Crown for monies it claims are owing pursuant to a contract that Burmet entered into with the First Nation for the supply of labour, materials and equipment for demolition, site work and reconstruction of residences damaged by flooding on land owned by the Crown and reserved for and occupied by the First Nation. The plaintiff also claimed that in default of payment of the sum claimed, the lands should be sold pursuant to the Construction Lien Act, R.S.O. 1990, c. C.30, as amended.

[3] The Crown brought a motion to strike the plaintiff’s claim on the grounds that the Construction Lien Act does not apply to the Federal Crown nor does it apply in respect of land reserved for the First Nation.

[4] Further, the Crown submitted that the Crown was not a party to the contract between Burmet and the First Nation and, accordingly, that the statement of claim disclosed no reasonable cause of action against the Crown.

[5] The Crown also sought an order amending the name of the defendant “Her Majesty the Queen in Right of Canada”, to “the Attorney General of Canada”, pursuant to s. 23(1) of the Crown Liability and Proceedings Act, R.S.C. 1985, Chapter c-50.

[6] On the hearing of the motion, counsel for Burmet conceded that the Construction Lien Act did not apply to the Federal Crown nor to the lands in question that are reserved for the First Nation.

[7] Counsel for Burmet also acknowledged that the correct name for the Crown as a defendant in this case is “the Attorney General of Canada”.

[8] On the hearing of the motion to strike, following the concession that the Construction Lien Act was not applicable in this case, Burmet sought leave to amend its statement of claim to claim unjust enrichment and quantum meruit. Burmet did not serve and file a written motion with respect to this claim for relief.

[9] The Crown opposed the request to amend the statement of claim on the grounds that no facts had been alleged which would permit an amendment to be made. Further, the Crown submitted that the plaintiff was barred under the Limitations Act, 2002, c.24, Sched. B from advancing a claim that arose more than two years ago. The Crown also opposed the request to amend on the basis that Burmet had not brought a formal motion to amend, with a draft amended statement of claim.

[10] Based on the acknowledgment of Burmet that the Construction Lien Act does not apply to the Federal Crown nor to lands reserved for the First Nations under the Indian Act, R.S.C. 1985 Chapter I-5, I struck out those parts of the statement of claim that pertained only to the claims under the Construction Lien Act as disclosing no reasonable cause of action.

[11] The name of the defendant, “Her Majesty the Queen in Right of Canada”, was deleted and “the Attorney General of Canada” was substituted therefor.

[12] I found that the facts pleaded, although pleaded imperfectly, supported a cause of action of unjust enrichment and quantum meruit as against the Crown. The plaintiff was therefore not asserting a new cause of action and the Limitations Act did not come into play.

[13] I granted the plaintiff leave to amend the statement of claim. In the interests of efficiency and cost saving, I did not require the plaintiff to deliver a written notice of motion to amend.

Submissions

[14] Each of the Crown and Burmet seeks their costs of the motion.

[15] The Crown asks for partial indemnity costs totalling $4,754.53, plus disbursements of $1,909.37, which includes the costs of travel of counsel between Ottawa and Thunder Bay in the sum of $1,479.00.

[16] Burmet requests partial indemnity fees of $1,742.50 for a portion of its docketed time, plus substantial indemnity fees of $1,140.00 for the balance of its docketed time, plus disbursements, including HST of $431.23.

[17] The Crown submits that the motion could have been avoided. The Crown submits that counsel for Burmet did not respond to three letters that the Crown sent during the first half of 2015, notifying the plaintiff that the Construction Lien Act did not apply to the claims. The Crown also submits that the plaintiff did not respond when in March 2016 the Crown sent the plaintiff a draft notice of motion to strike and that counsel for the plaintiff responded only when the motion to strike was filed.

[18] The Crown submits that although the plaintiff’s factum on the motion to strike indicated that the plaintiff was seeking leave to amend the statement of claim if the Crown was successful on the motion, the plaintiff did not provide a draft amended statement of claim, a motion to amend or any other explanation for the basis of the amendment to permit the Crown to properly asses the request in advance of the hearing of the motion. The Crown submits that it learned of the plaintiff’s arguments to amend for the first time in the plaintiff’s responding submissions on the hearing of the motion.

[19] Burmet submits that at the hearing of this motion it admitted that the Construction Lien Act did not apply in this case and acknowledged that those allegations had to be struck from the claim.

[20] Burmet notes that on July 14, 2016, it proposed through counsel that it would consent to an order striking the claim against the Crown with leave to amend. The Crown advised that it could not agree unless the Crown was left out of the amended claim. Burmet submits that if its proposal had been accepted, there would have been no need for the motion to be heard.

Discussion

[21] In Finn Way General Contractor Inc. v. S. Ward Construction Inc., 2014 ONSC 4071, I set out the principles and factors to be considered when the court assesses costs:

[19] In Serra v. Serra (2009), 2009 ONCA 395, 66 R.F.L. (6th) 40 (Ont. C.A.), at p. 42, the Court of Appeal reiterated the fundamental purposes which modern costs rules are designed to foster, as set out in Fong v. Chan (1999), 46 O.R. (3d) 330 (Ont. C.A.), at para. 22:

(1) to partially indemnify successful litigants for the costs of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour.

[20] In Anderson v. St. Jude Medical Inc., [2006] O. J. No. 508 (Ont. Div. Ct.), at para. 22, the Divisional Court set out the principles to be applied by the court in exercising its discretion (citations omitted):

1. The discretion of the court must be exercised in light of the specific facts and circumstances of the case in relation to the factors set out in Rule 57.01(1).
2. A consideration of experience, rates charged and hours spent is appropriate, but is subject to the overriding principle of reasonableness as applied to the factual matrix of the particular case. The quantum should reflect an amount the court considers to be fair and reasonable rather than any exact measure of the actual costs to the successful litigant.
3. The reasonable expectation of the unsuccessful party is one of the factors to be considered in determining an amount that is fair and reasonable: Rule 57.01(1)(O.b).
4. The court should seek to avoid inconsistency with comparable awards in other cases. “Like cases [if they can be found], should conclude with like substantive results.”
5. The court should seek to balance the indemnity principle with the fundamental objective of access to justice.

[21] The Court of Appeal has made it clear that in assessing costs the overriding principle is one of reasonableness and that the failure to follow that principle can produce a result that is contrary to the fundamental objective of access to justice (Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (Ont. C.A.), at p. 302.

[22] In Zesta Engineering Ltd. v. Cloutier, [2002] O.J. No. 4495 (Ont. C.A.), at para. 4 the Court of Appeal did not make a specific finding with respect to the amount of time spent or the rates charged by counsel, and stated:

“In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant.”

[23] Rule 57.01(1) of the Rules of Civil Procedure provides:

“57.01 (1) Factors in discretion - In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,

(0. a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer; (0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed; (a) the amount claimed and the amount recovered in the proceeding; (b) the apportionment of liability; (c) the complexity of the proceeding; (d) the importance of the issues; (e) the conduct on any party that tended to shorten or lengthen unnecessarily the duration of the proceeding; (f) whether any step in the proceeding was, (i) improper, vexatious or unnecessary, or (ii) taken through negligence, mistake or excessive caution; (g) a party’s denial of or refusal to admit anything that should have been admitted; (h) whether it is appropriate to award any costs or more than one set of costs where a party, (i) commenced separate proceedings for claims that should have been made in one proceeding; or (ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different solicitor; and (i) any other matter relevant to the question of costs.”

[24] Rule 1.04 (1.1) of the Rules of Civil Procedure provides:

1.04 (1.1) In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.

[22] It is apparent that the Crown tried repeatedly though correspondence in 2015 to advise Burmet that the Construction Lien Act did not apply to the Federal Crown nor to lands reserved for the First Nations defendant. The law is clear. The Crown was correct. Burmet did not respond. It was only after the Crown had prepared its motion materials that counsel for Burmet proposed that the claim against the Crown be struck, with leave to amend.

[23] It was Burmet’s error as to the applicability of the Construction Lien Act and its failure to respond on a timely basis that left the Crown with no choice but to incur the expense of bringing its motion. The Crown should be partially indemnified for that expense.

[24] On the other hand, the proposal that counsel for Burmet made in his e-mail of July 14, 2016 to counsel for the Crown, to consent to an order whereby the claim against the Crown would be struck, with leave to amend, was, in essence, what was ordered after the hearing of the motion. On the hearing of the motion, after Burmet conceded that the pleadings on the Construction Lien Act should be struck, the Crown argued strongly that leave to amend should not be granted. Burmet was successful on that issue.

[25] In my view, because the motion was precipitated by Burmet’s untenable pleading of the Construction Lien Act and by its failure to responsively acknowledge on a timely basis that the pleading was improper, and because it was Burmet’s failure to adequately plead its claims of unjust enrichment and quantum meruit that required it to obtain leave to amend, the Crown should have an award of costs. However, that award should be tempered by the fact that if Burmet’s proposal on July 14, 2016 had been accepted, the matter would not have required a hearing.

[26] The partial indemnity hourly rates shown for counsel for the Crown, of $114.84 and $91.26 for Julie Greenspoon and Sanam Goudarzi, respectively, are more than reasonable. Their years of call are 2009 and 2012, respectively. They have docketed 40 hours in total for preparation, plus approximately 1 hours for Ms. Greenspoon’s attendance on the motion. In contrast, Michael Harris, counsel for Burmet, shows 10 hours for preparation and attendance at the hearing of the motion.

[27] In my view, 40 hours preparation for this motion to strike is high.

[28] I will allow the disbursements claimed by the Crown, except the disbursement of $1,479.00 shown as “Lawyer travel to motion”. Travel to the motion would not have been required if Burmet’s July 14, 2016 proposal had been accepted.

[29] Although I have no doubt that the disbursement was incurred, there was no breakdown of the amount of $1,479.00. I would note in passing that if out-of-town counsel seek to claim travel expenses to and from Thunder Bay, the expense should be itemized so that they can be assessed for reasonableness.

[30] The disbursements claimed by the Crown are reduced to $430.37.

[31] Having regard to the factors discussed above I am of the opinion that it is fair and reasonable to award the Attorney General of Canada partial indemnity costs of this motion in the sum of $2,000 for fees and $430.37 for disbursements.

_________ ”original signed by”_ ___ Regional Senior Justice D. C. Shaw

Released: February 10, 2017

COURT FILE NO.: CV-14-0253 DATE: 2017-02-10

ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: BURMET NORTHERN LTD., Plaintiff

• and - KASHECHEWAN FIRST NATION (formerly Fort Albany Indian Reserve No. 67) and HER MAJESTY THE QUEEN IN RIGHT OF CANADA Defendants DECISION ON COSTS Shaw J.

Released: February 10, 2017 /sab