DATE: 20021113

DOCKET: C34759

COURT OF APPEAL FOR ONTARIO

GOUDGE, MACPHERSON and CRONK JJ.A.

B E T W E E N :

Thompson MacDonald, as trustee for the Canadian Broadcasting Corporation Pension Plan, Lillian Campbell, as trustee for the Canadian Broadcasting Corporation Pension Plan, George Jones, as trustee for the Canadian Broadcasting Corporation Pension Plan, Jim McColl, as trustee for the Canadian Broadcasting Corporation Pension Plan, M. Alain Paris, as trustee for the Canadian Broadcasting Corporation Pension Plan, Louise Tremblay, as trustee for the Canadian Broadcasting Corporation Pension Plan, M. George C.B. Smith, as trustee for the Canadian Broadcasting Corporation Pension Plan, A. MacKenzie Adamson, Haviland Allen, Tilak Raj Anand, Bankmont & Co., Clary Bijl, Cornelis Bijl, BIL Group Limited, Claude Blais, Joseph F. Blattler, Rudi Blattler, Paulette Borsook, Jean Bouteille, William C.B. Bowman and J. Douglas Bowman, as Executors of the Estate of John B. Bowman, P. Derrick Bowring, B.S.L. Development Ltd., C & J Management Limited, Eileen Joan Cardiff, William Andrew Cardiff, David G. Chapman, Chelhasa Limited, Edward M. Davis, Don Desrosiers, William Dickson, J. Arnold Denton, Duca Community Credit Union Ltd., William C. Fyvie, as trustee for Andrew Fyvie, Russell Gee, Gordon Gollifer, Robert D. Goodfellow, Bernard G.E. Guichon, Thomas P. Hansen, Fred Heimbecker, Audrey S. Hellyer Charitable Foundation, Helmhorst Investments Limited, David E. Howard, Dennis Charles Hutton, Illya Systems Ltd., Ernst G. Jessen, James Dennis Jones, Steven Jurick, Clare Keith, Clayton Keith, William Kudlac, John Landsdell, as trustee for Gulf Pacific Properties Ltd., Robert Latowski, Harry A. Law, Warren C. Leonard, Lloyds Bank Plc Geneva Branch, as trustee, Loreen Long, Fred Marks, Joseph Martin, William V. Martin, Merchant (2000) U.S. Inc., Robert McCrindell, Nancy McDougall, Britta McNeill, James McPhail, Andrew Megaw, Betty Munro, Wesley Murphy, Norval Financial Services Inc., Bubpha Ongthet, Doreen L. Raymond, William J. Raymond, Stuart Ross, Benoit Roy, Roycan & Co., as trustee for Banque Hapoalim Luxembourg and Banque Cantonale de Geneve, Joan E. Rundle, Ronald J. Siblock, Viola Jean Sidey, Jean Slieker, Shirley W. Sloan, Laura Smith, James E. Sneyd, Bill Spetz, Glen Stewart, David G. Stocks, Robert E. Storie, Bernard F. Strohmann, Elaine Sweenie, Laurence J. Tarshis, Russell K. Thoman, Thelma J. Trickett, Andre Trudel, Margo J. Warrington, Edwin Weiss, Glen G. Williams, Herbert A. Willis, Michael Wyman, Cynthia Wyman, Saul Yablo, Kim Yee, Josie Yee, Ruth I. Young

Plaintiffs (Appellants)

• and -

BF Realty Holdings Limited, BCE Inc., Carena Developments Limited, Partnerco Equities Ltd., Brookfield Development Corporation, Gordon E. Arnell, Warren Chippindale, Jack L. Cockwell, Josef J. Fridman, Willard J. L'Heureux, Robert E. Kadlec, John R. McCaig, Allan S. Olson, John A. Rhind, J. Stuart Spalding, Kevin Benson, C. Wesley M. Scott, J.V. Raymond Cyr, A. Jean de Grandpre, Lynton R. Wilson, Henry A. Roy and Gerald T. McGoey

Defendants (Respondents)

Counsel: Kenneth Prehogan, John M. Buhlman and Kerry A. Boniface, for the Appellants Edward J. Babin, Jane S. Bailey and Andrew E. Bernstein, for the Respondents BF Realty Holdings Limited and Brookfield Development Corporation David R. Byers and Elizabeth Pillon, for the Respondents Carena Developments Limited, Partnerco Equities Ltd., Gordon E. Arnell, Jack L. Cockwell, Willard J. L’Heureux and Kevin Benson Alan J. Lenczner, Q.C., M. Michael Title and Anne E. Posno, for the Respondents BCE Inc., Warren Chippindale, J. Stuart Spalding, Josef J. Fridman, C. Wesley M. Scott, J.V. Raymond Cyr, A. Jean de Grandpre, Lynton R. Wilson, Henry A. Roy and Gerald T. McGoey Mark A. Gelowitz, for the Respondents Robert E. Kadlec, John R. McCaig, Allan S. Olson and John A. Rhind

Submissions in Writing

ADDENDUM TO JUDGMENT

BY THE COURT:

[1] Further to the reasons for judgment in this matter issued on May 29, 2002, now reported at 2002 ONCA 44954, [2002] O.J. No. 2125, we have received the Bills of Costs of the respondents and the written submissions of the parties concerning costs. At the conclusion of our reasons, we awarded the costs of the appeal to the respondents on a partial indemnity basis.

[2] Counsel for the respondents seek costs as follows:

(i) on behalf of BF Realty Holdings Limited and Brookfield Development Corporation, costs in the aggregate amount of $60,489.24 are sought, comprised of $54,008.00 on account of fees, $2,524.00 for disbursements, and $3,957.24 for Goods and Services Tax (“GST”);

(ii) on behalf of the BCE Inc. group of respondents, costs in the aggregate amount of $34,828.78 are sought, comprised of $32,003.00 on account of fees, $547.26 for disbursements, and $2,278.52 for GST;

(iii) on behalf of the Carena Developments Limited group of respondents, costs in the aggregate amount of $23,388.50 are sought, comprised of $21,740.25 on account of fees, $118.16 for disbursements, and $1,530.09 for GST; and

(iv) on behalf of his clients, Mr. Gelowitz seeks costs in the aggregate amount of $13,439.20, comprised of $12,560.00 on account of fees and $879.20 for GST. No claim is made for disbursements.

The sums claimed for fees include counsel fees for attendances at this hearing and fees incurred in preparation of the Bills of Costs filed with the court. Those Bills were prepared on a partial indemnity basis in accordance with our reasons for judgment. The costs claimed by all the respondents total $132,145.72.

[3] In response to the costs claimed, the appellants make three main submissions. First, they argue that the costs awarded to BF Realty Holdings Limited, represented on this appeal by Mr. Babin, Mr. Bernstein and Ms. Bailey, who also represented Brookfield Development Corporation, should be stayed pending the final determination of the appellants’ on-going lawsuit against BF Realty Holdings Limited and the other respondents. That argument is based on the assertion that part of the legal services rendered pertain to BF Realty Holdings Limited, which is now an insolvent corporation. The appellants argue that if they are successful in the pending action as against BF Realty Holdings Limited, no meaningful opportunity will be available to them to set off any amount recovered by them from BF Realty Holdings Limited against the costs awarded to BF Realty Holdings Limited in this proceeding. They submit that unless a stay is granted, they will be prejudiced by paying costs to an insolvent company in connection with this proceeding, prior to judgment in the action.

[4] Second, the appellants argue that costs should be calculated on a party and party basis, rather than on a partial indemnity scale, because the appeal was initiated prior to January 1, 2002, the date that amendments to the costs provisions of the Rules of Civil Procedure, introduced by O. Reg. 284/01, came into force.

[5] Finally, on the grounds detailed in their written submissions, the appellants maintain that the costs claimed by each group of respondents are excessive and should be reduced. In particular, they object to the hours and hourly rates claimed by various of the respondents’ counsel.

(i) Request for a Stay of the Costs Award in Favour of BF Realty Holdings Limited

[6] The appellants emphasize that this proceeding was an appeal of a decision on the trial of an issue, and that resolution of that issue is not determinative of the appellants’ entire action. The appellants hold debentures of BCE Development Corporation which were valued at approximately $24.8 million at the time of acquisition. They argue that, since no interest was paid on those debentures as at December 31, 1990 and unpaid interest continued to accrue under the debentures until the appellants’ action was commenced in 1996, BF Realty Holdings Limited owes the appellants an amount far in excess of any award of costs to which it might be entitled in this proceeding. Thus, the appellants assert, if they are successful in their action against BF Realty Holdings Limited, they will be entitled to set off against the amount found to be owing to them the amount owed by them to BF Realty Holdings Limited for costs. Therefore, they urge that a stay of the costs award on this appeal in favour of BF Realty Holdings Limited should be granted.

[7] We do not agree. The appellants are not entitled at present to any right of set-off against BF Realty Holdings Limited. A right of set-off may only arise when, and if, the appellants are successful in the action against BF Realty Holdings Limited. Accordingly, while we make no comment on the merits of the pending action, the asserted right of set-off is, at best, an uncertain future right contingent on success in the litigation now in progress. Accordingly, it cannot support a stay of a costs award to which BF Realty Holdings Limited is now entitled.

[8] Further, and in any event, an apportionment of the costs award in this proceeding as between BF Realty Holdings Limited and Brookfield Development Corporation, both of whom were represented by the same counsel, would rest on a speculative footing. The appellants suggest that the claimed stay should apply to 50% of the amount of costs awarded to both BF Realty Holdings Limited and Brookfield Development Corporation. Such an approach requires the court to notionally apportion the services provided to the clients, in the circumstances of joint representation, on an arbitrary basis without demonstration that the legal services in fact may be fairly and properly apportioned between the two clients. On the record before this court, there is no principled basis upon which such an apportionment might be ordered. Accordingly, we reject the appellants’ request for a stay.

(ii) Request for Costs on a Party and Party Basis

[9] The debentures of BCE Development Corporation held by the appellants were issued in 1988. The events giving rise to the current litigation occurred in the years 1989 to 1995. The appellants’ action was commenced in 1996. The trial of an issue, which subsequently formed the basis of this appeal, was ordered in January 1999, and was determined by Cumming J. by judgment dated June 29, 2000. This appeal was heard on December 5 and 6, 2001. As noted above, O. Reg. 284/01, which amended the costs provisions of the Rules of Civil Procedure and introduced the “costs grid” for costs on partial and substantial indemnity scales, came into force on January 1, 2002. The reasons for the decision of this court were released on May 29, 2002.

[10] On those facts, the appellants argue that all costs in relation to this appeal were incurred under the costs regime in place prior to January 1, 2002. Accordingly, although the reasons for the decision of this court were released after the operative date of O. Reg. 284/01, the appellants argue that the scale of costs to be applied is that established by the former costs regime. The issue is important to the parties because the hourly rates which could be claimed by counsel for the respondents under the former costs regime are said to be materially lower than the hourly rates provided under the new costs grid. According to the appellants’ submissions, application of the lower hourly rates, without any other reduction of the claimed costs, would result in a reduction of $53,600.69 from the total amount of $132,145.72 claimed by the respondents.

[11] The issue of application of the new costs grid in cases where most, or all, of the relevant legal services were rendered prior to January 1, 2002 has been considered by the Superior Court of Justice in several cases. The approach taken in those cases to application of the new costs grid has not been uniform. In some instances, where the parties to the litigation conducted themselves in the reasonable expectation that the pre-January 1, 2002 costs regime governed, and such reliance was established before the court, the new costs grid was not applied. In other cases, recognition has been given to the general rule that procedural enactments are presumed to have retrospective effect, such that the new costs grid was held to govern awards of costs made after January 1, 2002.

[12] As a general rule, enactments are not to be given retrospective effect in the absence of a clear expression of a contrary legislative intent. That general rule, however, is subject to the established exception that procedural enactments are presumed to have a retrospective effect. This court has recognized that litigation costs are procedural in nature: see Shea v. Miller, 1970 ONCA 250, [1971] 1 O.R. 199 (C.A.) and Somers v. Fournier (2002), 2002 ONCA 45001, 214 D.L.R. (4th) 611 (Ont. C.A.).

[13] The consequences of a retrospective application of the new costs grid can be serious and, in some cases, highly prejudicial to the affected parties. In those circumstances, justice between the parties may require a court, in the exercise of its discretion concerning costs, to deviate from the strict requirements of the costs regime envisaged by O. Reg. 284/01. In our view, however, those cases will be rare and will normally depend on evidence of actual prejudice beyond the fact that the legal services at issue were rendered prior to January 1, 2002.

[14] In this case, no demonstration of such prejudice has been advanced or established. There is no basis, therefore, to depart from the traditional approach of retrospective application of enactments in the nature of O. Reg. 284/01. This court’s award of costs was made after O. Reg. 284/01 came into force. Accordingly, the scale of costs applicable to the costs award made in favour of the respondents is governed by O. Reg. 284/01. Thus, costs are to be calculated on a partial indemnity, rather than a party and party, basis.

(iii) Other Suggested Reductions in the Costs Claimed by the Respondents

[15] The appellants also challenged in some respects the hourly rates of, and hours spent by, counsel for the respondents, and claimed various reductions in the Bills of Costs filed with this court. We conclude that it is necessary to address only those submissions relating to the hourly rates claimed for some junior counsel.

[16] The Bill of Costs submitted on behalf of BF Realty Holdings Limited and Brookfield Development Corporation claims an hourly rate of $225 each for Jane Bailey and Andrew Bernstein. At the time of this hearing, those individuals had 7 and 3 years of experience, respectively, at the Bar. Accordingly, the claimed hourly rates are the maximum rates permitted under the costs grid, on a partial indemnity scale.

[17] While years of experience alone should not dictate the fixing of the hourly rate of counsel within the ranges contemplated by the costs grid, they are a significant factor. We accept the appellants’ submission that, having regard to the years of experience of Ms. Bailey and Mr. Bernstein, less than the maximum rates should apply. In our view, an appropriate hourly rate for those individuals on this appeal is $200 for Ms. Bailey and $150 for Mr. Bernstein. Adjustment of the hourly rates in that manner results in a reduction of $7,966.15 (including GST) to the costs claimed on behalf of BF Realty Holdings Limited and Brookfield Development Corporation.

[18] A corresponding reduction, for similar reasons, should be made to the hourly rates claimed for Elizabeth Pillon and Manizeh Fancy in the Bill of Costs submitted on behalf of the Carena Developments Limited group of respondents. We accept the appellants’ submission that appropriate hourly rates for those individuals are $200 and $125, respectively, on this appeal. Adjustment of the hourly rates on that basis results in a reduction of $1,181.55 (including GST) to the costs claimed by this group of respondents.

[19] In connection with the challenge advanced by the appellants to the hours spent by various of the respondents’ counsel, we do not consider the time spent to be unreasonable having regard to the complexity and importance of the legal issues raised on this appeal, some of which involved unusual questions of law and mixed law and fact.

(iv) Disposition

[20] Accordingly, for the reasons set out, the respondents are entitled to their costs of the appeal on a partial indemnity basis, fixed as follows:

(a) costs for BF Realty Holdings Limited and Brookfield Development Corporation: $52,523.09, inclusive of GST and disbursements;

(b) costs for the Carena Developments Limited group of respondents: $22,206.95, inclusive of GST and disbursements;

(c) costs for the BCE Inc. group of respondents: $34,828.78, inclusive of GST and disbursements; and

(d) costs for the Robert E. Kadlec group of respondents: $13,439.20, inclusive of GST and disbursements.

Those costs awards result in total costs payable to the respondents in the sum of $122,998.02.

RELEASED: “NOV 13 2002” “S.T. Goudge J.A.”

“STG” “J.C. MacPherson J.A.”

“E.A. Cronk J.A.”