COURT FILE NO.: 598/04
DATE: 20060803
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
CHAPNIK, EPSTEIN, SWINTON JJ.
in the matter of section 31 of the expropriations act,
r.s.o. 1990, c. E.26, AS AMENDED
B E T W E E N:
TORONTO AND REGION CONSERVATION AUTHORITY (formerly The Metropolitan Toronto and Region Conservation Authority)
Respondent (Appellant)
- and -
A. EDWARD GADZALA, V & E GADZALA HOLDINGS LIMITED and 412264 ONTARIO LIMITED
Claimants (Respondents on Appeal)
Paul R. Henry and Robert B. Lawson, for the Respondent/Appellant, Toronto and Region Conservation Authority
Stephen Waqué and Sean L. Gosnell, for the Claimants/Respondents
COURT FILE NO. 599/04
AND B E T W E E N:
CITY OF TORONTO (formerly City of Etobicoke)
Respondent (Appellant)
- and -
John S. Doherty and Mark Wiffen, for the Respondent/Appellant, City of Toronto
A. EDWARD GADZALA, V & E GADZALA HOLDINGS LIMITED and 412264 ONTARIO LIMITED
Claimants (Respondents on Appeal)
Stephen Waqué and Sean L. Gosnell, for the Claimants/Respondents
COSTS ENDORSEMENT
BY THE COURT:
Overview
[1] On April 24, 2006, we released our Reasons in these two appeals that were heard together. The appeals were brought by the City of Toronto (the “City”) and the Toronto and Region Conservation Authority (the “TRCA”), from an order of the Ontario Municipal Board. The order awarded compensation for the expropriation of certain properties to the Claimants (Respondents on Appeal), Edward Gadzala, V & E Gadzala Holdings Limited, and 412264 Ontario Limited (the “Claimants”). The appeals took place over four days.
[2] We invited the parties to provide written submissions in the event that they were unable to agree on the matter of costs. We have now received and reviewed those submissions.
[3] Each of the parties has a different view regarding its relative success in the appeals. The TRCA and the City claim they were successful because the Court reduced the compensation owed by them in the combined amount of $5,850,000.00. The Claimants, however, claim success overall against the TRCA and the City, given that with respect to the majority of the issues, the Court dismissed the appeal and upheld the Board’s decision.
General Principles
[4] This Court has wide discretion to order costs pursuant to s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43. In exercising this discretion, the Court is guided by the factors set out in Rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194:
Factors in Discretion
57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party’s denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding, or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different solicitor; and
(i) any other matter relevant to the question of costs.
[5] The Claimants argue that the prima facie rule is that in expropriation proceedings, costs are awarded to claimants on a substantial indemnity scale. They base this argument, in part, on s. 32(1) of the Expropriations Act, R.S.O. 1990, c. E.26. That section, however, applies solely to proceedings before the Board and has no effect on the wide discretion granted to courts under s. 131(1) of the Courts of Justice Act.
[6] While costs are discretionary, a successful party is entitled to a reasonable expectation of costs, in the absence of special circumstances. Where an expropriating authority successfully appeals a decision of the Board, it has usually been awarded its costs. Salvation Army, Canada East v. Ontario (Minister of Government Services) (1984), 1984 1884 (ON SC), 48 O.R. (2d) 327, 31 L.C.R. 193 at 207 (Div. Ct.), aff’d 53 O.R. (2d) 704 (C.A.). In Salvation Army, an expropriating authority appealed an award in excess of $4.7 million and was successful in having it reduced to approximately $2.1 million. The authority was awarded its costs by both the Divisional Court and the Court of Appeal. Similarly, the expropriating authority was awarded its costs after a successful appeal of a Board’s award in Bernard Homes Limited v. York Catholic District School Board (2004), 83 L.C.R. 176 at 194 (Div. Ct.).
[7] As articulated in Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), the overriding principle of reasonableness must always be considered in fixing costs. Boucher instructs the court to step back and consider whether the result produced by the hours and rates calculation is fair and reasonable. The ultimate award should reflect more what the court views as a fair and reasonable amount to be paid by the unsuccessful party rather than any exact measure of the actual costs to the successful litigant.
The TRCA Appeal
[8] There were five issues raised by the TRCA on appeal: the market value assessment of the Motel Properties; the application of the Pointe Gourde rule; the assessment of damages for injurious affection; the disturbance damages for delay; and the compensation for loss of riparian rights.
[9] Of these five issues, the TRCA was successful with respect to only one issue: disturbance damages for delay. This issue, however, was of substantially greater monetary significance to the parties than the other issues on appeal, since it involved the Board’s award of $4 million to the Claimants.
The Claimants’ Position
[10] The Claimants seek costs in the TRCA appeal on a substantial indemnity scale, fixed in the amount of $254,000.00, inclusive of GST and disbursements.
[11] The Claimants argue that they were successful on four out of the five issues. Furthermore, they submit that they acted entirely reasonably in defending the Board’s decision on the issue of disturbance damages for delay, the only issue upon which the TRCA was successful. They also contend that the TRCA tended to lengthen the proceedings by bringing unnecessary preliminary motions, and that the appeal involved complex issues.
The TRCA’s Position
[12] The TRCA seeks costs in the amount of $125,000.00, inclusive of GST and disbursements.
[13] It emphasizes that it was completely successful in having the Board’s award of $4 million in damages for delay overturned. It submits that the issue of disturbance damages for delay was the most time-consuming and important issue on appeal. As well, the evidence relating to this issue was discrete in that it did not have a bearing on either the market value or the injurious affection claims, though some other issues were inter-related.
[14] The TRCA also submits that in advancing a hypothetical claim for disturbance damages for delay, the Claimants acted unreasonably. Moreover, according to the TRCA, its preliminary motions were necessary to organize and present this appeal properly, and it had a considerable measure of success on those motions.
The City Appeal
[15] There were three issues raised by the City on appeal: the award of disturbance damages for loss of opportunity for parkland dedication; the award of disturbance damages for delay (appealed jointly with the TRCA); and the assessment of the market value of the House Properties. The City was successful with respect to damages for the loss of opportunity to obtain a parkland credit and, as noted above, with respect to the damages for delay. The Court upheld the Board’s decision on market value.
The Claimants’ Position
[16] On the City appeal, the Claimants seek costs on a substantial indemnity scale, fixed in the amount of $35,000, inclusive of GST and disbursements, representing their costs for the portion of the appeal pertaining to market value.
[17] They submit that with respect to market value, the City essentially asked the Court to re-try the case and substitute new findings of fact in the City’s favour, which the Court declined to do.
[18] They propose that no costs should be awarded to either party in respect of the other issues involving the City. The City, the Claimants argue, added nothing of value to the TRCA’s submissions on the delay claim, and the City was not a party to the proceeding in which that award was made. With respect to the lost opportunity matter, the Claimants contend that the City wanted this novel issue to be determined and the importance of the Court’s decision on lost opportunity will extend beyond the parties. The Claimants argue that where an appeal raises novel issues, costs are generally not awarded, regardless of where success falls.
[19] As in the TRCA appeal, the Claimants stress that the City appeal involved factual and legal complexities, and that the City’s conduct tended to lengthen the proceedings.
The City’s Position
[20] The City seeks costs fixed in the amount of $170,000.00 plus GST and disbursements of $47,769.36.
[21] The City submits that it was substantially successful on the appeal. In support of this claim, the City stresses that the Court allowed its appeals from the findings of liability for lost opportunity for parkland dedication of $1.85 million and for delay of $4 million. It claims that the market value issue on which the Claimants were successful was of little significance compared to the other issues on which the City was successful.
[22] The City states that the issues were all resolved based on established principles, and the alleged novelty of the parkland credit claim should not shield the Claimants from liability for costs. It further submits that its submissions on delay damages were useful, not duplicative or repetitive, and appropriate in the circumstances.
Analysis
[23] Generally speaking, the Claimants have focused their submissions on the number of issues won and lost by each side, whereas the Appellants’ arguments revolve around the reduced quantum of compensation and the relative importance of each issue upon which they were successful. As noted above, the Board’s award to the Claimants was reduced by $5,850,000.00 in these appeals. Clearly, this reduction in quantum of the award, along with the varying degrees of success on individual issues, must be taken into consideration in determining what is a fair and reasonable costs award in these circumstances.
[24] This case involved considerable complexity. As noted by the Claimants in their submissions, the proceedings before the Board included 215 exhibits, more than 15,000 pages of documents put into evidence, a wide range of expert evidence from appraisers, land use planners, engineers and accountants, and approximately 50 days of hearings, resulting in 48 volumes of transcripts.
[25] The Appellants rely on Salvation Army, supra, as authority for the principle that they are entitled to costs due to their success. That case is distinguishable, however, since there was essentially only one major issue to be resolved, and the expropriating authority in that case was entirely successful on that one issue. In contrast, the success of the Appellants relative to the Claimants in this case must be regarded in light of the number of issues raised, the nature of each issue in terms of its importance to the overall result, and the Claimants’ success on each issue. Furthermore, it is significant that despite our decision to reduce the Board’s award to the Claimants, the $5 million award that we upheld is far above and beyond the TRCA’s original offer of $70,000.
[26] In determining which parties achieved substantial success, we note that compared to the other issues, the monetary result in the issue of disturbance damages for delay was significant, and the time spent by counsel on this issue was correspondingly and justifiably extensive. In the case of the TRCA, however, its success on this important issue must be weighed against its loss on the four other issues it raised on appeal.
[27] Ultimately, from a fair and reasonable point of view, we consider that the success between the TRCA and the Claimants was equally divided. Taking into account all of the circumstances, including the factors outlined in Rule 57.01, the costs we would award to each of those parties would reasonably equate to the other. Due to their divided success, we, therefore, make no award of costs to the TRCA or the Claimants in respect of the issues concerning them.
[28] On the other hand, the balance of success in the appeal between the Claimants and the City leans clearly in favour of the City, as the City was successful on the two most time-consuming and financially significant issues out of the three issues raised.
[29] In that regard, we do not agree that it was unreasonable for the City to provide its own submissions on the issue of disturbance damages for delay. In argument before the Court, the City was careful to avoid re-stating the TRCA’s arguments unnecessarily, and it conducted itself reasonably given its exposure to assume responsibility for 50% of an award for compensation under this category.
[30] In the result, we have determined that a fair and reasonable assessment of costs with respect to matters involving the Claimants and the City would be an award in favour of the City in the sum of $120,000.00, inclusive of GST and disbursements. In our view, the Claimants could reasonably expect to pay this amount due to the results achieved by the City in relation to the issues between them.
Conclusion
[31] Taking into account the factors in Rule 57.01(1), the relevant jurisprudence and the parties’ submissions, including the amount of costs claimed by them, costs are awarded to the City against the Claimants in the amount of $120,000.00 inclusive of GST and disbursements. In light of the divided success between the TRCA and the Claimants, no costs are awarded to either of these parties.
CHAPNIK J.
EPSTEIN J.
SWINTON J.
Released: August 3, 2006
COURT FILE NO.: 598/04 and 599/04
DATE: 20060803
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
CHAPNIK, EPSTEIN, SWINTON JJ.
B E T W E E N:
TORONTO AND REGION CONSERVATION AUTHORITY
Respondent (Appellant)
- and –
EDWARD GADZALA, V & E GADZALA HOLDINGS LIMITED and 412264 ONTARIO LIMITED
Claimants (Respondents)
B E T W E E N:
CITY OF TORONTO (formerly City of Etobicoke)
Respondent (Appellant)
- and –
EDWARD GADZALA, V & E GADZALA HOLDINGS LIMITED and 412264 ONTARIO LIMITED
Claimants (Respondents)
COSTS ENDORSEMENT
BY THE COURT
Released: August 3, 2006