DATE: 20030619

DOCKET: C37899

COURT OF APPEAL FOR ONTARIO

RE: TRANSCANADA PIPELINES LIMITED (Plaintiff (Respondent, Appellant by way of Cross-Appeal)) – and – POTTER STATION POWER LIMITED PARTNERSHIP (Defendant (Respondent in support of the appeal)) – and – THE ROYAL INSURANCE COMPANY OF CANADA LIMITED and COMMONWEALTH INSURANCE COMPANY OF CANADA LIMITED (Third Parties (Commonwealth, Appellant in its capacity as third party defending the main action, Respondent by Cross-Appeal))

BEFORE: MACPHERSON, SIMMONS AND CRONK JJ.A.

COUNSEL: Warren H.O. Mueller, Q.C. For the appellant Commonwealth Insurance Company of Canada Limited

Richard H. Krempulec, Q.C. For the respondent TransCanada Pipelines Limited

HEARD: October 25, 2002

C O S T S E N D O R S E M E N T

[1] Commonwealth Insurance Company of Canada Limited appealed unsuccessfully against the order of the motion judge refusing its request for summary judgment dismissing TransCanada Pipelines Limited’s action and declaring that an indemnity provision extends to damages suffered by TransCanada directly.

[1] We see no basis for awarding costs on a substantial indemnity basis. Given the nature of the appeal, the amount in issue on appeal, the hours claimed by counsel, and TransCanada’s special fee arrangement with counsel, the costs of the appeal are awarded to TransCanada on a partial indemnity basis fixed at $14,000 inclusive of disbursements and G.S.T.

[2] Counsel for TransCanada has properly acknowledged that he learned of the decision in Lawyers Professional Indemnity Co. v. Geto Investment Ltd. (2002), 17 C.P.C. (5th) 14 (S.C.J.) only after the order under appeal was entered. We agree with Nordheimer J.’s observations at paragraph 17 of that decision that counsel operating under a special fee arrangement are obliged to disclose the particulars of that arrangement to the court and that it is not appropriate that counsel seek an award of costs in excess of amounts actually being charged to the client. We also agree that where a costs award is made on a partial indemnity basis, a special fee hourly rate should be discounted to reflect the scale of costs awarded.

[3] The motion judge awarded costs on a partial indemnity basis using the maximum rate of $350 per hour. TransCanada has a special fee arrangement with its counsel for an hourly rate that is less than that figure. Given that the special fee arrangement was not disclosed to the motion judge, we direct that the motion judge’s costs award be adjusted by substituting an hourly rate of $225 per hour for the figure of $350 per hour used by the motion judge. The $225 figure reflects what we consider is an appropriate discount of the special fee hourly rate for an award of costs on a partial indemnity basis.

“J. C. MacPherson

_ “Janet Simmons J.A.”

“E. A. Cronk J.A.”