COURT OF APPEAL FOR ONTARIO

CITATION: Stewart v. Toronto (Police Services Board), 2020 ONCA 460

DATE: 20200710

DOCKET: C65779

Brown, Huscroft and Trotter JJ.A.

BETWEEN

Luke Stewart

Appellant (Plaintiff)

and

The Toronto Police Services Board

Respondent (Defendant)

Davin Charney and Christopher Rapson, for the appellant

Kevin McGivney and Jonathan Thoburn, for the respondent

Winston Gee and Sarah Whitmore, for the intervenor Canadian Civil Liberties Association

Heard: December 17, 2019, with written cost submissions

On appeal from the judgment of Justice Bernadette Dietrich of the Superior Court of Justice, dated July 13, 2018, with reasons reported at 2018 ONSC 2785 and reasons for costs dated August 21, 2018, reported at 2018 ONSC 4790.

COSTS ENDORSEMENT

OVERVIEW

[1] By reasons dated April 16, 2020, we allowed Mr. Stewart’s appeal, set aside para. 1 of the trial judge’s Judgment, allowed Mr. Stewart’s claim, granted him Charter damages in the amount of $500, set aside the award of costs made in para. 2 of the Judgment against Mr. Stewart, awarded him costs of the appeal in the amount of $20,000, and invited the parties to make written cost submissions if they could not agree on the costs below. The parties were not able to reach an agreement, and we have reviewed their written cost submissions.

[2] Mr. Stewart seeks costs of the proceeding below on a substantial indemnity basis in the amount of $114,584.61. The Toronto Police Services Board (“TPS”) seeks its costs of the proceeding below in the amount of $25,000.

ANALYSIS

Mr. Stewart’s claim for substantial indemnity costs

[3] Mr. Stewart advances three arguments for granting him substantial indemnity costs: (i) his action was public interest litigation that warrants substantial indemnity costs; (ii) he achieved a result that was more favourable than the offer to settle that he made pursuant to r. 49 of the Rules of Civil Procedure; and (iii) the proper application of the r. 57.01 factors should result in an award of substantial indemnity costs. We are not persuaded by these arguments.

[4] First, Mr. Stewart’s action does not satisfy the criteria for awarding special costs on a substantial indemnity basis in cases involving public interest litigants as set out by the Supreme Court of Canada in Carter v. Canada (Attorney General), 2015 SCC 5, [2015] 1 S.C.R. 331, at paras. 137-140.

[5] Carter requires a litigant to satisfy two criteria for an award of public interest litigation special costs, the first of which is to demonstrate that his proceeding involved matters of public interest that are “truly exceptional” and he has no personal, proprietary or pecuniary interest in the litigation that would justify the proceeding on economic grounds: at para. 140. Mr. Stewart does not satisfy this first criterion. He had an encounter with members of the TPS that he alleged resulted in the violation of several of his rights guaranteed under the Canadian Charter of Rights and Freedoms. Mr. Stewart brought a civil suit seeking a remedy for those violations. But, as the Supreme Court observed in Carter at para. 137, “[a]lmost all constitutional litigation concerns ‘matters of public importance’”. While Mr. Stewart advanced important Charter claims, we do not regard the matters raised in his proceeding as “truly exceptional”, within the meaning of Carter.

[6] Also, Mr. Stewart has not demonstrated that he has “no personal, proprietary or pecuniary interest in the litigation that would justify the proceedings on economic grounds”: Carter, at para. 140. On the contrary, the pleadings and history of this action show that Mr. Stewart had a personal and pecuniary interest in the litigation. He initiated the lawsuit in the Small Claims Court but then transferred it to the Superior Court of Justice. At trial, Mr. Stewart sought damages for the violation of his personal rights in the amount of $100,000 which, at the time, was the upper limit for a monetary claim in a simplified procedure action under the Rules. While Mr. Stewart reduced his request for damages during the appeal to $50,000, and then to $20,000, monetary damages as compensation for a wrong to his personal rights remained a key element of his claim. Accordingly, his action does not satisfy the Carter criteria for an award of substantial indemnity costs for public interest litigation.

[7] Second, Mr. Stewart did not obtain a judgment that was as favourable or more favourable than the terms of his offer to settle dated May 6, 2014. The offer contained three main components: (i) payment to him of $5,000 for all claims and damages; (ii) payment of his partial indemnity costs and disbursement to the date of settlement; and (iii) a written statement from the TPS admitting “the facts and liability” alleged in certain paragraphs of his amended statement of claim. In the result, while this court set aside the dismissal of his action, the $500 in damages awarded to Mr. Stewart was far less favourable than the amount set out in his offer to settle.

[8] In his cost submissions, Mr. Stewart states that securing an admission of liability from the defendants was the central issue in pursuing settlement, not compensation. Since the TPS was found liable for the Charter breaches alleged in the portions of the amended statement of claim identified in his offer to settle, Mr. Stewart contends that he obtained a judgment more favourable than his offer. While Mr. Stewart did succeed in his Charter claims, the fact remains that the amount of damages awarded to him was substantially less than what he offered to settle for. As a result, Mr. Stewart’s offer to settle does not engage the costs consequences set out in r. 49.10(1).

[9] Finally, Mr. Stewart contends that a proper application of the standard r. 57.01(1) factors justifies awarding him substantial indemnity costs. We do not agree. We see nothing in the litigation conduct of the TPS in the proceeding below that would merit an award of elevated costs.

Partial indemnity costs and the TPS offers to settle

[10] Although Mr. Stewart’s costs submissions focused on his claim for substantial indemnity costs, his bill of costs records that he incurred partial indemnity costs totaling $87,240.76 for the proceeding below. Given that Mr. Stewart ultimately succeeded in his action, as a successful litigant he would be presumptively entitled to costs on a partial indemnity basis.

[11] However, the TPS made two offers to settle. The first, dated July 2, 2014 (the “2014 Offer”), offered to pay Mr. Stewart an all-inclusive amount of $5,000. The TPS made a second offer, dated August 4, 2017 (the “2017 Offer”), about six months prior to the start of the trial, in which it offered to pay Mr. Stewart $10,000 for all damages, together with prejudgment interest and partial indemnity costs to the date of the offer. The TPS submits that Mr. Stewart obtained a judgment less favourable than either of its offers to settle, with the result that Mr. Stewart is entitled to his partial indemnity costs to the dates of the offers and the TPS to its partial indemnity costs thereafter: r. 49.10(2).

[12] Putting to one side the issue of whether the 2014 Offer continued in force following the making of the 2017 Offer, the record before us indicates that it is highly unlikely that Mr. Stewart failed to obtain a judgment less favourable than the all-inclusive amount of $5,000 offered in the 2014 Offer. Mr. Stewart’s litigation stretched back to 2011. His bill of costs discloses that he incurred at least $4,500 in partial indemnity costs from 2011 until the date of the 2014 Offer which, coupled with the $500 damage award, would result in a recovery greater than the $5,000 TPS 2014 Offer.

[13] Of more consequence is the TPS 2017 Offer. Mr. Stewart obtained a judgment less favourable than the TPS 2017 Offer. Rule 49.10(2) provides that in such circumstances, the plaintiff, Mr. Stewart, is entitled to partial indemnity costs to the date the offer was served and the defendant, TPS, is entitled to partial indemnity costs from that date “unless the court orders otherwise”.

[14] The TPS submits that its reasonable partial indemnity costs from the date of the 2017 Offer through to the end of trial amounted to approximately $75,000. However, that amount is disproportionately high for this simplified procedure action in which the upper limit for claimed damages was $100,000. The TPS bill of costs discloses that its litigation team consisted of three lawyers, one law clerk, and an articling student. While a litigant is free to staff its litigation team as it sees fit, for the purposes of determining reasonable partial indemnity costs in a simplified procedure action, the hours claimed by the TPS are too high. On our review of the TPS bill of costs, reasonable partial indemnity costs for the period covered by the 2017 Offer would be in the neighbourhood of $40,000.

[15] Nevertheless, even with that reduction of partial indemnity costs, the net result of a strict application of r. 49.10(2) would see Mr. Stewart pay the TPS about $8,000 to $10,000 in partial indemnity costs, assuming his pre-2017 Offer partial indemnity fees constituted approximately 40% of his overall fees.

[16] Mr. Stewart submits that a costs award under which he was required to pay some amount to TPS would be a harsh result for a case in which an individual successfully enforced his constitutional rights.

[17] We see merit in that submission.

[18] Rule 49.10(2) provides a presumption as to costs where an offer is not accepted and the discretion to depart from the presumption should be exercised in accordance with the purpose of the rule, which is to encourage parties to make reasonable offers to settle: Barresi v. Jones Lang Lasalle Real Estate Services Inc., 2019 ONCA 884, at para. 17. Departure from the general rule embodied in r. 49.10(2) should occur only where, after giving proper weight to the policy of the general rule, the importance of reasonable predictability and the even application of the rule, the interests of justice require a departure: Barresi, at para. 18.

[19] In our view, the present case is one where the interests of justice require a departure from the general rule in r. 49.10(2). Although Mr. Stewart’s action did not meet the criteria for an award of public interest litigation special costs, the issues raised by his action will contribute to a better understanding of the interplay between Charter rights and permissible police crowd control techniques.

[20] As well, it is significant that notwithstanding the fact that Mr. Stewart maintained his claim for a large amount of damages through to trial, his May 6, 2014 offer to settle was a serious effort on his part to settle the action for a modest amount of damages coupled with an admission of liability from the TPS regarding conduct that Mr. Stewart ultimately succeeded in establishing violated his Charter rights.

[21] In those circumstances, we conclude that it is in the interests of justice to depart from the cost presumption contained in r. 49.10(2) and to award Mr. Stewart costs of the proceeding below fixed in the amount of $25,000, inclusive of disbursements and applicable taxes.

DISPOSITION

[22] The TPS shall pay Mr. Stewart his costs of the proceeding below in the amount of $25,000, inclusive of disbursements and applicable taxes.

“David Brown J.A.”

“Grant Huscroft J.A.”

“Gary Trotter J.A.”