Toronto Star Newspapers Ltd. v. Fraleigh

107 O.R. (3d) 288

2011 ONCA 555

Court of Appeal for Ontario,

Feldman, Blair and LaForme JJ.A.

August 16, 2011

Civil procedure -- Costs -- Full indemnity -- Non-party obtaining publication ban and sealing order in action in which plaintiff referred extensively to non-party's health -- Newspaper intervening and seeking unsuccessfully to have publication ban and sealing order set aside -- Motion judge awarding "full indemnity" costs against newspaper -- Costs award not undermining open court principle and not inconsistent with s. 2(b) of Charter -- Motion judge not erring in awarding costs against intervenor -- Motion judge erring in awarding full indemnity costs -- Order set aside and replaced with order of partial indemnity costs.

Civil procedure -- Costs -- Intervenors -- Non-party obtaining publication ban and sealing order in action in which plaintiff referred extensively to non-party's health -- Newspaper intervening and seeking unsuccessfully to have publication ban and sealing order set aside -- Motion judge awarding "full indemnity" costs against newspaper -- Costs award not undermining open court principle and not inconsistent with s. 2(b) of Charter -- Motion judge not erring in awarding costs against intervenor.

F was a non-party to an action in which the plaintiff, F's ex-wife, referred extensively to F and to his health condition. When he discovered that the appellant newspaper was preparing a story on the allegations in the statement of claim, F obtained an ex parte publication ban and sealing order. The appellant [page289] was granted leave to intervene in the action for the sole purpose of setting aside the publication ban and sealing order, and F was granted leave to intervene to respond to the appellant's application and to seek an "appropriate" publication ban. On consent, the complete publication ban and sealing order were lifted and replaced with a publication ban pertaining only to information regarding F's health. The motion judge ultimately granted F an indefinite publication ban and confidentiality order and awarded costs against the appellant on a "full indemnity" basis. The appellant appealed the costs order.

Held, the appeal should be allowed in part.

A costs award was not inconsistent with the open court principle or s. 2(b) of the Canadian Charter of Rights and Freedoms. It was open to the motion judge to find that the appellant was motivated in part by business interests. The information F sought to protect was very personal and had little public importance. In the circumstances, the motion judge did not err in awarding costs against an intervenor. However, the motion judge erred in awarding elevated costs. He made no findings of misconduct, and erred in relying on the relative resources of the parties. The award of full indemnity costs should be set aside and replaced with an order of partial indemnity costs. The motion judge also erred in awarding costs for steps taken by F prior to the consent order. Up to that time, F had incurred legal costs pursuing his own unopposed interests and must have had a reasonable expectation that obtaining ex parte orders might be challenged.

APPEAL from the costs order of Whitten J., 2010 ONSC 4637 (S.C.J.).

Cases referred toDavies v. Clarington (Municipality) (2009), 100 O.R. (3d) 66, [2009] O.J. No. 4236, 2009 ONCA 722, 312 D.L.R. (4th) 278, 254 O.A.C. 356, 77 C.P.C. (6th) 1, apld Other cases referred to Jeremiah v. Toronto (Police Services Board), [2009] O.J. No. 3898, 2009 ONCA 671, 255 O.A.C. 198 [Leave to appeal to S.C.C. refused [2009] S.C.C.A. No. 471]; Lavigne v. O.P.S.E.U. (1989), 1989 4087 (ON CA), 67 O.R. (2d) 536, [1989] O.J. No. 95, 56 D.L.R. (4th) 474, 31 O.A.C. 40, 89 CLLC Â14,011 at 12068, 37 C.R.R. 193, 13 A.C.W.S. (3d) 348 (C.A.) Statutes referred to Canadian Charter of Rights and Freedoms, s. 2(b) Colleges Collective Bargaining Act, R.S.O. 1980, c. 74 Rules and Regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 49.10 Authorities referred to Orkin, Mark M., The Law of Costs, 2nd ed., looseleaf (Aurora, Ont.: Canada Law Book, 2010)

Paul Schabas, for appellant. Peter A. Downard and Catherine M. Wiley, for respondent.

LAFORME J.A.: -- [page290] Introduction

[1] The cost award at issue in this appeal arises from Greg Fraleigh's intervention in an action to which he was not a party. In the original action, the plaintiff, Mr. Fraleigh's ex-wife, refers frequently to Mr. Farleigh as well as his health. In January 2010, Mr. Fraleigh, without notice to the parties or the media, obtained a publication ban and sealing order in that action. The Toronto Star (the "Star") subsequently also intervened in the action seeking to have the publication ban and sealing order set aside.

[2] In April 2010, the motion judge granted a confidentiality order for certain paragraphs of the statement of claim and a publication ban for information which would disclose the personal health condition of and health care received by Mr. Fraleigh. The order was amended in early May 2010 to include the parts of the reasons that detailed that information. In September 2010, "full indemnity" costs of $93,173.67 were awarded against the Star. The Star appeals the costs award.

Background

[3] Mr. Fraleigh had been married to Joanne Fraleigh; however, their marriage irreparably broke down in 2003. Ms. Fraleigh and Mr. Fraleigh engaged in divorce litigation that settled in November 2009. A sealing order for the court file was made on December 12, 2008. Mr. Fraleigh had been in a conjugal relationship with Catherine Killen since 2007.

[4] Mr. Fraleigh's business had group insurance with the Great-West Life Assurance Company ("GWL") from 2005 to 2007, during which time he submitted health-related claims. Ms. Killen was an employee of GWL in 2007.

[5] In June 2009, Ms. Fraleigh issued a statement of claim against GWL and Ms. Killen alleging negligence and breach of trust. The alleged negligence and breach of trust arose out of the fact that Ms. Killen was involved in adjusting medical insurance claims made by Mr. Fraleigh while simultaneously engaging in a personal relationship with him. Mr. Fraleigh was not a party to the action.

[6] A sealing order was placed on the case in December of 2008. On January 7, 2010, Mr. Fraleigh, as a non-party, obtained an ex parte order extending the sealing order and a complete publication ban over the underlying civil action. He sought the publication ban and sealing order because he had been contacted by a reporter for the Star and had been advised that the Star was preparing a story on the allegations in the statement of claim in the underlying action. [page291]

[7] The January 7, 2010 publication ban and sealing order were to be in effect until January 21, 2010. However, on January 17, 2010, the publication ban and sealing order were extended first to February 2, 2010, and again by further order until an unspecified return date.

[8] Upon learning that the court file had been sealed and was also subjected to a publication ban, the Star sought leave to intervene in the action for the sole purpose of setting aside the publication ban and sealing order. Mr. Fraleigh responded by also seeking leave to intervene to respond to the Star's application and to seek an "appropriate" publication ban on information respecting his personal health and any personal health care he had received. On consent of the parties, on February 25, 2010, Milanetti J. granted both the Star and Mr. Fraleigh leave to intervene.

[9] In addition, Milanetti J. lifted the complete publication ban and sealing order obtained by Mr. Fraleigh in January 2010. She replaced them with a publication ban only pertaining to information concerning Mr. Fraleigh's health, as this was the information that Mr. Fraleigh sought to protect from public disclosure. The publication ban issued by Milanetti J. was temporary, pending full argument on Mr. Fraleigh's motion.

[10] On March 22, 2010, Mr. Fraleigh was examined briefly by the Star's counsel on his affidavit sworn on March 5, 2010. On March 24, 2010, before the motions had been heard, the Star published a front-page story on the Fraleighs and Ms. Killen titled "The wife, the husband & the insurance affair": Tracey Tyler, "The wife, the husband & the insurance affair", Toronto Star (March 24, 2010). There is no suggestion that this story, which does not mention Mr. Fraleigh's health condition, breached any part of Milanetti J.'s order.

[11] The two motions were heard together on March 30, 2010. Ms. Fraleigh's counsel attended on the motion and supported the position of the Star. On May 5, 2010, the motion judge released his decision granting Mr. Fraleigh's indefinite publication ban and confidentiality order. The publication ban and confidentiality order imposed by the motion judge pertained to information respecting Mr. Fraleigh's health and any health care he had received. This order was substantially the same as the temporary ban imposed by Milanetti J. on February 25, 2010.

[12] On September 7, 2010, after a review of the parties written cost submissions, the motion judge, Whitten J., ordered "full indemnity" costs of $93,173.67 against the Star. The cost award is the only decision of the motion judge that is under appeal. [page292]

Reasons of the motion judge

[13] As a brief introduction, the motion judge's reasons on costs can be broken down into two parts: why costs are appropriate, and why "full indemnity" costs are warranted. I will provide further detail of his reasons on these two parts as I proceed through my analysis.

[14] For purposes of the first part, the motion judge noted that the motion regarding the publication ban touched on significant Canadian Charter of Rights and Freedoms issues of privacy and openness of the courts, but that the specific information sought by the Star was "not lofty" and was possibly prurient. The Star, he found, is a business, not a non-profit interest group, and while it may have acted "to preserve freedom of the press and openness of the court", it was also motivated by a potential economic benefit.

[15] Mr. Fraleigh, the motion judge held, was entitled to protect his interests to privacy and had legal precedent to support doing so. In the motion judge's view, there was no reason in the circumstances of this case to depart from the general principle that the successful party should receive his costs.

[16] As for the second part, the motion judge held that this is an exceptional situation for which substantial indemnity costs are usually reserved. However, he then went on to award "full indemnity" costs. In the motion judge's opinion this was a "David and Goliath situation", "between a media giant and an individual trying to protect his right to privacy . . . fac[ing] the possible publication of profound and unproven allegations".

Issues

[17] The Star appeals the motion judge's decision on costs and advances three grounds, namely: (i) the costs award is inconsistent with the protection provided under s. 2(b) of the Charter; (ii) the costs award contravenes a rule of general principle; and (iii) elevated costs are not appropriate in this case.

[18] In response, Mr. Fraleigh's position is essentially that the Star demonstrated a callous disregard for the highly sensitive personal health interests of an emotionally fragile person and should not be insulated from its conduct. He submits that the law's requirement of an "obvious" case in which there are "strong grounds" to interfere with an order as to costs has not been met.

[19] I would dismiss grounds one and two advanced by the Star, but I would give effect to the third ground. While I believe the motion judge erred in awarding full indemnity costs, I find that it was a proper exercise of his discretion to award costs. [page293]

[20] Contrary to the Star's assertions, I do not think the specific facts of this case provide a compelling argument that the costs award undermines the open court principle by deterring the media from fulfilling its important constitutional role in protecting open courts.

Analysis

(i) Is the award inconsistent with s. 2(b) of the Charter, the open courts principle and the role of the media?

[21] I begin by observing that the Star does not per se argue a violation of s. 2(b) of the Charter; rather, it relies on the section as evidence of the constitutionally important role of the media in protecting Canada's open courts doctrine. The essence of the argument is that to punish the Star with costs -- as was done here -- is not only inconsistent with the media's Charter-protected role, but puts a chill on it: it discourages the media from protecting the open court doctrine.

[22] In dismissing the Star's motion regarding costs, the motion judge, at para. 10, described the underlying litigation as follows:

What was at stake in terms of what was going to be published was not of ilk of a political philosophy debate. It was the details of citizens in private litigation.

[23] The motion judge's view was that the Star was not compelled to resist the application of Mr. Fraleigh. That may be true; however, it was nevertheless lawfully entitled to advance and argue the constitutional principles underlying the intervention. The Star was properly responding to an order obtained ex parte by Mr. Fraleigh, which effectively closed the court to the public. It did nothing wrong and was within its rights to do so.

[24] At the same time, however, the motion judge also found that the Star was additionally motivated by business interests, which was open to him on the record. The nature of the information Mr. Fraleigh sought to protect was very personal and had little public importance in regards to keeping the courts open.

[25] In the unusual facts of this case, the dispute centered on the privacy interest and the nature of the information at stake, weighed against the public interest in the openness of courts together with a financial interest. These competing interests, in these circumstances, do not necessarily insulate either of the parties from a costs order. [page294]

(ii) Did the motion judge err by awarding costs against an intervenor, in violation of the general principle that intervenors in constitutional/public interest litigation are not subject to costs orders?

[26] In this case, both parties intervened in the litigation for legitimate purposes as is indicated by the fact they were each granted the necessary leave to do so. Indeed, the motion judge recognizes the legitimacy of the interventions where, at para. 18, he notes, "Mr. Fraleigh, like the Star, was entitled to protest his interests". Accordingly, the Star contends, the costs award is contrary to the general principle that intervenors in constitutional/public interest litigation are not awarded costs, nor are costs awarded against them.

[27] The Star argues further that there was no basis for any departure from this general rule. On the contrary, the Star claims that given the fact that both the affected parties are intervenors, the court should apply the general principle that no costs should be awarded to intervenors.

[28] In the immediate case, both the Star and Mr. Fraleigh were joined as intervenors, but the nature of their involvement is not in the typical context. As such, the references to more typical intervenors on this appeal are not determinative. Even so, the Star, as I have mentioned, argues that the normal rule for intervenors in public interest litigation should apply -- that is, that intervenors neither receive nor pay costs.

[29] While it does appear that a general rule has developed where intervenors are neither awarded costs nor ordered to pay them, exceptions have been made. For example, in Lavigne v. O.P.S.E.U. (1989), 1989 4087 (ON CA), 67 O.R. (2d) 536, [1989] O.J. No. 95 (C.A.), which included in part a constitutional challenge to a section of the Colleges Collective Bargaining Act, R.S.O. 1980, c. 74, the Court of Appeal for Ontario awarded costs to several intervenors: p. 576 O.R. In ordering costs to intervenors, a judge exercises discretion and is owed deference by this court.

[30] Here, while the Star was entitled to take the position that there was a public interest element to its intervention to preserve freedom of the press and openness of the court, it was also intervening to advance its own interest in publishing the protected information. As the motion judge found it was also motivated by business interests, a finding that was open to him on the evidence.

[31] Both parties in this proceeding were entitled to use legal proceedings to protect their interests or advance public interest obligations and to ask for costs, especially if successful. I would [page295] therefore not interfere with the motion judge's exercise of his discretion to order costs in the circumstances of this case.

(iii) Did the motion judge err by awarding full indemnity costs?

[32] In determining the extent of a costs award, the ordinary rule is that the successful litigant is entitled to his or her costs. However, while awarding costs is a discretionary exercise, attracting a high level of deference, awards must be given on a principled basis. While I accept that the motion judge was entitled to exercise his discretion and order costs, I do not accept that he did so on a proper basis. Accordingly, his decision is not entitled to deference and this court can intervene: Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66, [2009] O.J. No. 4236 (C.A.).

[33] I begin by noting that it is not entirely clear from the motion judge's decision whether he intended to award costs on a substantial indemnity or full indemnity scale. At paras. 19 and 20, he notes that this is an exceptional case that calls for substantial indemnity, but goes on to award full indemnity costs. In any event, I believe he erred in three respects in awarding elevated costs: (i) he made no findings of misconduct; (ii) he relied on the relative resources of the parties; and (iii) he awarded costs for steps taken by Mr. Fraleigh which should not be the responsibility of the Star.

[34] This court, at para. 31 of Clarington, reaffirmed the principle that elevated costs are warranted in only two circumstances. First, where there is an offer to settle under rule 49.10 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which has no application in this case. Second, on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made.

[35] There are simply no findings by the motion judge of actual misconduct let alone conduct that can be described as reprehensible. As I noted above, the motion judge recognized the propriety of the Star in advancing its interest. Indeed, it seems to me that the motion judge was primarily motivated by his unfavourable view of the Star's claims and his perception of an inequality of resources.

[36] At para. 16, he observes: "The high minded assertions of the Star are not without commercial consequences. The Star is not a non-profit interest group." And later, at para. 19, he justifies his ultimate order with these remarks:

Substantial indemnity costs are usually reserved for exceptional situations. This situation, between a media giant and an individual trying to protect his right to privacy is exceptional. This, like any David and Goliath situation, was, to say the least, a tough battle based on principle. [page296]

[37] First, the view of the motion judge on the ethics of the Star seeking to publish potentially embarrassing personal information about Mr. Fraleigh does not amount to conduct worthy of sanction by the courts. Second, the relative resources of litigants is not relevant in determining a costs award except perhaps when considering the impecuniosity of a plaintiff in making a costs award against them: see Mark M. Orkin, The Law of Costs, 2nd ed., looseleaf (Aurora, Ont.: Canada Law Book, 2010), at para. 205; Jeremiah v. Toronto (Police Services Board), [2009] O.J. No. 3898, 2009 ONCA 671, leave to appeal to S.C.C. refused [2009] S.C.C.A. No. 471.

[38] There was no evidence provided as to the relative resources of the Star and Mr. Fraleigh. There is also no other analysis of any of the required principles that must inform a judge when exercising his or her discretion to award costs.

[39] I would, therefore, set aside the motion judge's order of full indemnity costs and substitute an order of partial indemnity costs as discussed below.

(iv) What is the appropriate costs award?

[40] Finally, the Star submits that there was no basis for awarding costs for steps taken by Mr. Fraleigh leading up to the lifting of the publication ban and sealing order that he had improperly obtained. I agree.

[41] Once again, it was Mr. Fraleigh who on January 7, 2010 obtained a complete publication ban and sealing order without notice to anyone. The order was periodically extended, ultimately until an unspecified return date. It was not until February 17, 2010 that the Star brought its motion to intervene. Also on February 17, Mr. Fraleigh responded by bringing his own motion to intervene to respond to the Star's motion and to seek an "appropriate" publication ban on information respecting his personal health.

[42] On February 25, 2010, Milanetti J. issued a consent order granting both Mr. Fraleigh and the Star leave to intervene and lifting the previous publication ban and sealing order. Milanetti J. replaced the publication ban with one only pertaining to information concerning Mr. Fraleigh's health. This was the information that Mr. Fraleigh sought to protect from public disclosure. The publication ban by Milanetti J. was a temporary measure pending full argument on Mr. Fraleigh's motion.

[43] Up to the time of the consent order, Mr. Fraleigh had incurred legal costs pursuing his own unopposed interests. It must have been a reasonable expectation that obtaining such an order in this fashion and in connection with his ex-wife's litigation [page297] might be challenged. To be sure, when the motions of the Star and Mr. Fraleigh were heard together, Ms. Fraleigh supported the Star's position.

[44] Furthermore, the Star's conduct in challenging Mr. Fraleigh's complete publication ban was found by the motion judge to be, at least in part, "to preserve freedom of the press and the openness of the court". Thus, it seems to me that there is no basis for any costs award up to the time of the consent order.

[45] The litigation after February 25, 2010 related exclusively to the validity of the remaining partial ban and sealing order, which was upheld. The motion judge exercised his discretion, as he was entitled to, and, at para. 18, ordered costs to Mr. Fraleigh holding that

[h]e was the victor in a legitimate exercise. Our law provides that victors may seek their costs. There is no reason to deny him his costs.

[46] I would, in accordance with these reasons, award Mr. Fraleigh his costs, but only for the contested litigation that occurred after February 25, 2010, on a partial indemnity scale. The costs should be fixed in the amount of $28,000, inclusive of disbursements and applicable taxes.

Disposition

[47] For the foregoing reasons, I would allow the Star's appeal in part. I would set aside the motion judge's order of full indemnity costs and substitute an order of partial indemnity costs fixed in accordance with these reasons. In all other respects, I would dismiss the appeal.

[48] Finally, with due consideration of this result, if the parties are unable to agree on the costs of the appeal, if any, they may make submissions in writing to be exchanged and filed within 30 days of the date of this decision.

Appeal allowed in part.