Intercontinental Forest Products SA et al. v. Rugo et al. Rugo et al. v. Intercontinental Forest Products SA et al. [Indexed as: Intercontinental Forest Products SA v. Rugo]
69 O.R. (3d) 668
[2004] O.J. No. 96
Court File Nos. 03-CV-250949CM3
Divisional Court File No. 637/03
Ontario Superior Court of Justice
Divisional Court
C. Campbell J.
January 14, 2004
Appeal -- Leave to appeal -- Defendant seeking leave to appeal order for payment of costs forthwith following granting and continuance of ex parte injunction against him -- Leave granted -- Issue of awarding costs in interlocutory injunction cases deserving appellate consideration.
Civil procedure -- Costs -- Interlocutory injunction -- Defendant seeking leave to appeal order for payment of costs forthwith following granting and continuance of ex parte injunction against him -- Leave granted -- Issue of awarding costs in interlocutory injunction cases deserving appellate consideration.
The defendant brought an application for leave to appeal an order for payment of costs forthwith following the granting and continuance of an ex parte injunction against him.
Held, the application should be granted.
As a result of a change in the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 57.03(1), now provides as the normal costs disposition that costs will be fixed and paid within 30 days and in failure thereof the defence may be struck. The issue of the impact on the traditional practice with respect to awarding costs in [page669] interlocutory injunction cases (which favoured awarding no costs to the successful plaintiff in the interest of protecting the status quo until trial) was deserving of appellate consideration.
APPLICATION for leave to appeal a costs order.
Cases referred to Rogers Cable TV Ltd. v. 373041 Ontario Ltd., [1994] O.J. No. 1087 (QL) (Gen. Div.); Rogers v. Sudbury (Administrator of Ontario Works) (2001), 2001 28086 (ON SC), 57 O.R. (3d) 460 (S.C.J.), supp. reasons (2001), 2001 28087 (ON SC), 57 O.R. (3d) 467, [2001] O.J. No. 3346 (QL), [2001] O.T.C. 630 (S.C.J.)
Statutes referred to Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131
Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 57.03, 62.02
Authorities referred to Sharpe, R.J., and T.A. Cromwell, Injunctions and Specific Performance, looseleaf ed. (Aurora, Ont.: Canada Law Book, 1998)
Robert Frank and Erik Penz, for plaintiffs. Paull N. Leamen and Chad Johnson, for Lorenzo Giovanni Rugo (a.k.a. Lawrence John Rugo), Euroseat Ltd., Amin Amlnai and Ana Basic.
[1] C. CAMPBELL J.: -- The defendant Rugo seeks leave to appeal from an order for payment of costs forthwith following the granting and continuance of an ex parte injunction against him.
[2] A related issue regarding the posting by the plaintiffs of security for the undertaking as to damages was not proceeded with on the understanding of counsel it may be raised by the defence in the future.
[3] Leave to appeal pursuant to rule 62.02 [Rules of Civil Procedure, R.R.O. 1990, Reg. 194] requires consideration:
(a) that there be conflicting decisions that are appropriate to be considered on appeal; and
(b) good reason to doubt the correctness together with a level of importance to the issues worthy of appellate consideration.
[4] On behalf of the defendant it is urged that costs to the successful plaintiff should not be awarded since the prevailing principle is that since a motions judge on an interlocutory injunction motion does not make final findings of fact, it is important to protect the parties' positions or "status quo" until trial [page670] (see Rogers Cable TV Ltd. v. 373041 Ontario Ltd., [1994] O.J. No. 1087 (QL) (Gen. Div.); also Sharpe, Injunctions and Specific Performance, looseleaf ed. (Aurora, Ont.: Canada Law Book, 1998), at p. 2-90.)
[5] For the plaintiff it is submitted that costs, particularly those following a motion by virtue of s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, and the decided cases, involve a high degree of discretion and should only be interfered with when there is a clear error in principle.
[6] I agree that in the ordinary course, the awarding of costs does involve a significant exercise of judicial discretion. The considerations include not only who should pay but when and in what amount payment should be paid. The standard for review of the ordinary costs award should recognize great deference to the motions judge. I accept the basic standard.
[7] There are two reasons for which, in my view, it is appropriate that there be appellate review of the exercise of discretion in respect of the interlocutory injunction cost award in this case.
[8] The first is that since the Rogers Cable TV case, supra, there has been a rule change. Rule 57.03(1) now provides as the normal costs disposition that costs will be fixed and paid within 30 days and in failure thereof the defence may be struck. Counsel were unable to find a case involving an interlocutory injunction where the rule change was considered.
[9] The second basis for my granting leave involves a case that was not brought either to my attention or to the attention of the motions judge but which squarely deals with the issue of discretion and the extent to which different considerations may apply in injunction cases.
[10] In Rogers v. Sudbury (Administrator of Ontario Works) (2001), 2001 28087 (ON SC), 57 O.R. (3d) 467, [2001] O.J. No. 3346 (QL) (S.C.J.), Epstein J. granted cost relief to an applicant challenging a decision that denied the applicant work benefits. The following passage summarizes the issue, at paras. 12-15:
I support the distinction identified by Borins J. in Rogers [sic, supra] that interlocutory injunctions ought to be treated differently when it comes to dealing with costs. In interlocutory motions that resolve disputes surrounding jurisdiction, production obligations, discovery parameters and matters of that nature, the decision determines a discrete issue. However, with interlocutory injunctions the moving party may ultimately lose at trial the very issue that is the subject matter of the interlocutory injunction since at the interlocutory stage balance of convenience and irreparable harm are taken into consideration. In such cases, the merits of the moving party's position are not thoroughly canvassed and ultimately determined until trial. Accordingly, the application of the basic principle that costs should follow the event becomes somewhat problematic. [page671]
It follows that, generally speaking, costs should be treated differently in motions for interlocutory injunctions depending on whether the granting of the injunction will put an effective end to the proceedings.
In the case at bar, it cannot be said that the interlocutory injunction effectively put an end to this action. [See Note 1 at end of document] However, I am of the view that such a finding does not foreclose the exercise of my discretion to make costs payable forthwith. There still may be circumstances where such an award is appropriate. One such reason is to advance judicial policy.
Traditionally, the fundamental principle of costs as between party and party was that the court awarded them as an indemnity to the person entitled to them. More recently, however, there has been a recognition that the principle of indemnification, while paramount, is not the only consideration when the court is called on to make an order of costs. Justice E. Macdonald, in Fellowes, McNeil v. Kansa General International Insurance Co. (1997), 1997 12208 (ON SC), 37 O.R. (3d) 464, 17 C.P.C. (4th) 400 (Gen. Div.), held that it was no longer suitable to confine the decision to award costs to principles of indemnification. Indeed, Justice Macdonald referred to the principle as being outdated since other functions may be served by a costs order, for example to encourage settlement, to prevent frivolous or vexatious litigation, and to discourage unnecessary steps.
[11] Given these comments, while recognizing the importance of deference, I am of the view that leave should be granted in this case, given both the importance of the issue to this case and other cases in view of the rule change and the costs indemnification regime now in place.
[12] How a judge should exercise discretion in favour of awarding costs in an injunction case deserves appellate consideration, particularly in circumstances as here where the finding does not necessarily end the proceeding. Leave to appeal is therefore granted.
[13] I would think that the costs of this leave to appeal might appropriately be left to the panel hearing the appeal. If counsel feel otherwise, they may make written submissions to be received within the next ten days.
Application granted.