The Corporation of the City of Peterborough v. Kawartha Native Housing Society Incorporated and Otonabee Native Homes Inc., 2011 ONCA 146

2011 ONCA 146

DATE: 20110225

DOCKET: C50793

COURT OF APPEAL FOR ONTARIO

Rosenberg, Armstrong and Juriansz JJ.A.

BETWEEN

The Corporation of the City of Peterborough

Plaintiff (Respondent)

and

Kawartha Native Housing Society Incorporated and Otonabee Native Homes Inc.

Defendants (Appellants)

Frank Bennett and Vilko Zbogar, for the appellants

Douglas O. Smith, for the respondent

Mervyn D. Abramowitz, for the receiver Mintz & Partners Limited

Murray Klippenstein and Basil Alexander, for the interveners Co-operative Housing Federation of Canada, Ontario Non-Profit Housing Association, and National Aboriginal Housing Association

Heard: June 10, 2010

On appeal from the order of Justice Barry G. A. MacDougall of the Superior Court of Justice dated June 17, 2009.

COSTS ENDORSEMENT

Introduction

[1] This endorsement addresses two matters:

(i) The costs of a re-argued motion before MacDougall J. of the Superior Court of Justice; and

(ii) The costs of the appeal.

(i) The costs of the re-argued motion

[2] We released our reasons for judgment in this matter on October 26, 2010. In para. 44 of those reasons, we said that the boards of the corporations were entitled to reimbursement for the costs of the corporations for the re-argument of the March 14, 2008 motion, which was re-argued on February 2, 2009. The March 14, 2008 motion resulted in the extension of the receivership for one year, the approval of certain of the receiver’s accounts and a disclosure order in favour of the boards. The motion judge also ordered the receiver to pay, from the funds of the corporations, costs of $32,230.64 for counsel retained by the boards of the corporations.

[3] On the re-argued motion on February 2, 2009 the motion judge effectively reversed his position on costs and concluded that the boards did not have the right to retain counsel after the receivership order was made, based on his interpretation of the operating agreements between the City of Peterborough and the corporations. The motion judge rescinded his previous costs order of $32,130.64. Although he had concluded that the boards did not have the right to retain counsel he made a costs order in favour of the boards in the amount of $15,000. He declined to award the boards costs for non-litigation legal work of $9,412.60.

[4] Much of the argument in the re-argued motion was directed to the issue of whether the boards had the right to retain counsel. The boards now seek costs of the re-argued motion, which they claim on a partial indemnity scale in the amount to $34,304 and on a full indemnity scale in the amount to $46,716, now reduced to $44,000.

[5] The appellant corporations are public sector organizations, which operate affordable rental housing for approximately 300 persons from the Aboriginal community in the Peterborough area. We would not expect public sector organizations to pay full indemnity hourly rates. In any event, whether one applies the hourly rates on either a full indemnity scale or a partial indemnity scale to the number of docketed hours for the re-argued motion, it produces an unreasonable result.

[6] On the original motion argued on March 14, 2008, this court awarded $7,500 in costs to the boards, a sum suggested by counsel for the boards. Counsel for the boards submits that the re-argued motion was based on a broader record, which justifies a greater costs award. The total hours docketed by counsel for the boards is 156.1. Although we accept that this was the time spent by counsel, it appears to us excessive. Also, a number of orders made on the original motion were not the subject of the re-argued motion. The principal issue on the re-argued motion was the right of the boards to retain counsel. This is an important issue and arguably attracts a costs award greater than $7,500. That said, we do not agree that it warrants 156.1 hours of lawyer time.

[7] We fix the costs of the re-argued motion in the amount of $15,000, inclusive of disbursements and applicable taxes.

(ii) The costs of the appeal

[8] After the notice of appeal was delivered in this case, the appellants moved before Blair J.A. in chambers for, inter alia, direction concerning whether the appellants may be represented in the appeal by counsel and a declaration that the appellants have the right to have their legal fees and expenses for the appeal paid out of the appellants’ funds.

[9] Blair J.A. ordered that the appellants were entitled to retain counsel for the appeal and that the boards of directors of the appellants were entitled to retain counsel on their behalf. Blair J.A. also ordered, “that the reasonable legal fees and expenses of counsel so retained are to be paid out of the Corporations’ assets, after assessment.”

[10] Paragraph 47 of our reasons for judgment provides that the appellants shall have their costs of the appeal in accordance with the order of Blair J.A.

[11] The appellants have requested that we fix the costs rather than require them to proceed to an assessment as provided for in the order of Blair J.A. The respondent takes no issue with the appellants’ request.

[12] We have decided to fix the costs as it will no doubt save valuable time required to educate an assessment officer on the factual and legal issues in the appeal.

[13] The appellants’ bill of costs shows docketed time for Mr. Zbogar (a 2002 call) of 170.7 hours and 30 hours for Mr. Bennett (a 1970 call). The partial indemnity hourly rate for Mr. Zbogar is $150 and $500 for Mr. Bennett. The substantial indemnity hourly rates are $200 and $750. While these rates appear to reflect rates charged by counsel for private sector clients, we are of the view that the rates of Mr. Bennett are high for a public sector client. The boards of the appellants filed bills of costs claiming $63,370 on a full indemnity scale and $46,533 on a partial indemnity scale.

[14] As in the case of the re-argued motion, we are of the view that the “hours times rates” approach produces an unreasonable result whether on a full indemnity or partial indemnity scale. This essentially single issue appeal simply does not attract costs in the range sought by counsel for the appellants.

[15] In our view, a reasonable award of costs in respect of work done of this kind for public sector clients is $30,000. We therefore fix the costs of the appeal payable to the boards of the appellants in the amount of $30,000 including disbursements and applicable taxes.

“M. Rosenberg J.A.”

“Robert P. Armstrong J.A.”

“R. Juriansz J.A.”