COURT FILE NO.: Divisional Court 406/00
DATE: 20030221
SUPERIOR COURT OF JUSTICE – ONTARIO
DIVISIONAL COURT
RE: Ontario Teachers’ Pension Plan Board Applicant (Respondent in Appeal)
and
Superintendent of Financial Services Respondent (Respondent in Appeal)
and
Anne Stairs Respondent (Appellant in Appeal)
HEARD: May 24; September 3, 2002; written submissions as to costs: December, 2002;
January, 2003.
BEFORE: Lane, Farley and Then JJ.
COUNSEL: Ari Kaplan, for the Appellant, Anne Stairs;
Freya J. Kristjanson, Anne Slivinskas and Markus F. Kremer, for the Respondent Board;
Deborah McPhail, for the Respondent Superintendent.
S U P P L E M E N T A R Y R E A S O N S F O R J U D G M E N T (C O S T S)
[1] On December 5, 2002, we released our Supplementary Reasons for Judgment dealing with the Board’s motion (Rule 59) to vary our original judgment by adjudicating upon certain additional matters relating to the appellant’s claim for the portion of her former husband’s death benefit assigned to her by him upon the breakdown of their marriage. We directed that submissions as to costs be made within thirty days.
[2] The first issue to be dealt with is whether the costs of the appeal, as well as the costs of the Rule 59 motion, are before us. At the end of our decision on the original appeal, we awarded the costs of the appeal to the appellant and fixed them at $5500, a conventional figure, based upon oral submissions at the conclusion of the hearing, before the result was known. The appellant now submits that, as the issue then before us was the threshold issue of whether there was any entitlement at all, submissions could not take into account the issue of the monetary recovery of the appellant versus her offer to settle. That could not be done until the decision on the Rule 59 motion which addressed the quantum issue. The Board’s motion was intended to limit the financial value of our original decision setting aside the ruling below and directing the payment to the appellant of her share of the death benefit. It is not a new issue, but a continuation of the original issue. The present value to the appellant of our order, as amended after the Rule 59 motion, is approximately $200,000; if the Board had prevailed, it would have been approximately $20,000. Had the Board accepted the appellant’s offer, it would have paid her only $50,000. The appellant submitted that these facts, very relevant to the costs issue, could not have been argued by counsel or considered by us after the original hearing because they were then unknown.
[3] The Board filed its submissions on costs on January 3, 2003, without having seen the appellant’s submissions which were filed on the 2nd. It responded to the claim for further costs of the appeal by letter of January 6, 2003. It submitted that no costs should be awarded (as per its January 2 submissions) but that if costs were awarded, they should be confined to the costs of the Rule 59 motion. Costs of the appeal, the Board submitted, had been fully dealt with already and there had been no cross-motion filed to vary our order as to costs. The submission that the costs issue should be revisited was a collateral attack on our first costs order.
[4] The appellant responded that its costs submissions were not an impermissible collateral attack upon the first order. No cross-motion was necessary because the September hearing was a continuation of the first hearing; they were one continuous process. Indeed, the Board had itself insisted, in the process of settling the Order, that there was one appeal only, although there were two dates. The Rule 59 motion was very broad and all parties understood that all matters requiring amendment were to be before the court.
[5] It is not literally so that all matters were before the court. It was made clear at the July meeting that the original decision that the appellant was entitled to share in the death benefit was not before the court in the resumed hearing: the issue was to what extent she was to share. Nevertheless, it was clear to all at that meeting that the ultimate result for the appellant would be profoundly affected by the outcome of the motion.
[6] Although it might not necessarily be so in every Rule 59 motion, in the present case we are of the view that there has been one proceeding conducted in two phases. The Rule 59 issues did not revisit the earlier issues, but were a logical and necessary sequel because there were key aspects of the statutory regime that were not explored until the second phase. The end result can now be judged relative to the criteria of Rule 57 in a way not possible previously. We therefore propose to revisit the costs issue from the outset.
[7] The appellant seeks substantial indemnity costs of both hearings and all preparation. She supports this submission in several ways:
a month before the first hearing, she offered to settle her claim for $50,000, one quarter of the award;
the Board rejected the offer and continued the litigation because it needed to clarify the PBA provisions dealing with situations such as that of the appellant;
the Board’s legal expenses are fully funded by the Plan; as a trustee seeking legal direction from the court, it ought equally to fund the cost of the appellant who is asserting a legal position which benefits many members;
the case is not a typical adversarial litigation; rather it is a “complex and novel test case … touching on significant matters of public policy in the area of pensions and family law.”
it is consistent with the purpose of the PBA as public welfare legislation intended to advance the interests of pension plan members and beneficiaries for the Plan to pay the appellant’s costs.
no other plan beneficiary asserted a position adverse to the appellant.
[8] The appellant referred to Rule 49 as applicable, but the Court of Appeal found in Niagara Structural Steel v W.D. LaFlamme Ltd. (1987), 58 O.R. (2nd) 773, (C.A.) that the Rule did not apply to appeals. However, under Rule 57, we can take any offer made by either party into account in determining the costs to be awarded. It is clear that the appellant made a genuine effort to avoid the litigation. The Board made a counter-offer at less than half of the appellant’s offer and some 10% of the award.
[9] In her submissions, the appellant recognizes that substantial indemnity costs are awarded only in exceptional circumstances, but submits that the rule is less applicable in pension litigation. Courts have often awarded pension plan members their costs from the plan when they are involved in litigation with the plan or the administrator. Recent examples include Schmidt v. Air Products of Canada Ltd. (1994), 115 D.L.R. (4th) 631, (S.C.C.) where all parties received their costs on a full indemnity basis from the funds at issue, and Bathgate v National Hockey League Pension Society (1992), 11 O.R. (3rd) 449 (Gen. Div.); 16 O.R. (3rd) 761 (C.A.) where the successful members received solicitor and client costs from the respondent hockey clubs and the remainder of their costs from the Fund.
[10] Of particular interest is Royal Trust Corp. of Canada v. Arthur Andersen Inc. (1994), 4 C.C.P.B. 199 (B.C.S.C.) where the issue was the distribution of pension assets in bankruptcy where the plan had no applicable provision. Different groups of beneficiaries were recognized and the Superintendent of Pensions was also a party. The court followed the reasoning in Re Buckton; Buckton v. Buckton, [1907] 2 Ch. 406 where it was recognized that in litigation arising out of some difficulty of construction or of administration of the plan, and necessary for the administration of the trust, the costs of all parties are necessarily incurred for the benefit of the trust as a whole and ought to be ordered to be paid on a solicitor and client basis out of the corpus of the trust. The Royal Trust court ordered the payment of all of the costs of certain successful beneficiaries, and half of the costs of unsuccessful beneficiaries, out of the fund.
[11] The appellant submits that the present case is similar to Royal Trust and to Buckton in that the litigation was necessary for the due administration of the Plan in circumstances not directly addressed by it. The result necessarily benefits the Plan as a whole and its members because it clarifies the issue of pre-retirement death benefit payments to former spouses under domestic contracts.
[12] The Board submitted that the same element of public interest existed, but drew the opposite conclusion: no costs should be awarded. The Board acted in good faith and success was divided and these factors meant that there should be no costs. Further, if there were to be costs, there should not be substantial indemnity costs because of the divided success. The Board referred to a number of cases in which various courts exercised their discretion to award no costs or partial indemnity costs only where there was divided success or a matter of first impression or of public interest. In none of these cases did the court review the principles to be applied in detail; they just applied their discretion, no doubt correctly in each case, but driven entirely by the particular facts involved.
[13] By contrast, the cases relied on by the appellant include Royal Trust, supra, containing an analysis of Buckton, supra, and C.A.S.A.W. Local 1 v. Alcan Smelters and Chemicals Ltd. (2001), 198 D.L.R. (4th) 504 (B.C.C.A.) which contains an analysis of the principles involved (pages 517-9) and awards unsuccessful appellants their reasonable costs and disbursements in a matter involving an interpretation of the language of the plan. We also observe that the Supreme Court of Canada awarded solicitor and client costs out of the funds of the plan in Schmidt v. Air Products Canada Ltd. (1994), 115 D.L.R. 631 where the issue was the interpretation of the Plan and whether the power to amend included the power to revoke.
[14] In our view the submissions of the appellant are persuasive. The litigation will clarify what has been a problematic part of the PBA for pension and family practitioners, and members and administrators of pension plans This benefits not only the members of this plan, but members and administrators of plans throughout Ontario. The cases cited show that in such circumstances it is appropriate that the plan bear the costs. This is a proper case on the facts set out above for such an order. Ms. Stairs will have her costs throughout on the substantial indemnity scale, payable by the Board.
[15] As to the quantum, counsel for the Board submitted in her letter of January 6, 2003, that she required the dockets in order to make submissions as to whether all time spent was necessary. She said that once they were received, “the Board may wish to make further submissions concerning the items listed”. Mr. Kaplan’s reply submissions of January 7 indicated that the dockets were forwarded on that day. No further submissions have been received as of February 19, and we assume that counsel is content to rely on her January 6 submissions.
[16] The Board was critical of the 65 hours spent in preparation for the motion, comparing the $18,000 plus thereby generated with the $5500 awarded by the court originally for the first day of the appeal. This is not an apt comparison for the reasons already set out. As well, we do not agree that the Rule 59 portion of the hearing was less complex than the original hearing. It was at least as complex, if not more.
[17] In fixing costs for appeals and related matters, it is not our task to make specific findings on hours and rates and arrive at an arithmetic result. Rather we should be guided by the decision of the Court of Appeal in Zesta Engineering Ltd. v. David Cloutier et al., Nov. 27, 2002, Docket C35856, where at paragraph 4 the Court said:
We have considered the bills of costs submitted by the appellant. However, we make no specific finding with respect to the amount of time spent or the rates charged by counsel. In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant.
[18] While that statement was made in the context of an award of partial indemnity costs, the approach is still an appropriate one where the costs are not being paid by counsel’s own client, but by another party on the substantial indemnity basis. Considering the litigation as a whole, it does not seem unreasonable for the Plan to bear $40,000 plus disbursements for the entire exercise and we so order.
[19] The costs are therefore fixed at $40,000 plus disbursements of $2,487.10 as claimed and GST, payable by the Board from the funds of the Plan.
Lane J.
Farley J.
Then J.
DATE: February 21, 2003