2018 ONSC 1929

DIVISIONAL COURT FILE NO.: 298/17 DATE: 20180320

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

MARROCCO A.C.J.S.C., MULLIGAN and MATHESON JJ.

BETWEEN:

MOHAWKS OF THE BAY OF QUINTE

Appellant

– and –

DIRECTOR, MINISTRY OF THE ENVIRONMENT, WASTE MANAGEMENT OF CANADA CORPORATION, TYENDINAGA AND ENVIRONS and NAPANEE GREEN LIGHTS

Respondents

E.K. Gillespie and A. Chachula, for the Appellant

H. Dahme and J. Boily for the Respondent, Waste Management of Canada Corporation

P. McCulloch, for the Respondent, Director, Ministry of the Environment and Climate Change

HEARD at Toronto: March 7, 2018

MULLIGAN J.

[1] The Mohawks of the Bay of Quinte (MBQ) seek to appeal the Costs Decision of the Environmental Review Tribunal (ERT) dated May 3, 2017. That decision, in turn, was reconsidered and upheld by the ERT Review Panel for reasons issued July 19, 2017. The respondent, Waste Management of Canada Corporation (Waste Management) opposes the costs sought against it. The respondent, The Director, Ministry of the Environment (MOE) appeared and took no issue with the facts as determined by the Tribunal, but made submissions with respect to the legislative scheme for the consideration of costs by tribunals governed by the provisions of the Statutory Powers Procedures Act, R.S.O. 1990, c. S.22 (SPPA).

Background

[2] On April 14, 2016, the Environmental Review Tribunal issued a decision following a lengthy hearing concerning the Richmond Landfill Site located in the Town of Napanee. The Richmond Site is owned by Waste Management.

[3] The MBQ is a band within the meaning of the Indian Act. They occupy the Tyendinaga Mohawk Territory, approximately four kilometres downstream from the Richmond Landfill Site. The MBQ were allies of the British Crown who came to the aid of the British in the American War of Independence in 1775 and again in the war of 1812. After the American Revolution, the Mohawks settled along the Bay of Quinte and were granted 92,700 acres of land. Under the terms of Treaty 3½, the Crown promised the MBQ in perpetuity the "free and undisturbed possession and enjoyment of the territory under the protection of the Crown".

[4] As appears from the affidavit of Chief R. Donald Maracle filed, MBQ has had a long history of concern about leachate from the Richmond site. Other residents in the vicinity also shared those concerns.

[5] In 2012, the Concerned Citizens Committee of Tyendinaga and Environs (CCCTE) was granted leave to appeal certain conditions of Amended Environmental Compliance Approval A371203 issued by the Director of the Ministry of the Environment to Waste Management regarding the closure of the Richmond site. MBQ obtained an order permitting the Band to intervene as a party. MBQ fully participated in the nineteen-day hearing that was conducted, and presented evidence through two expert witnesses.

[6] There is a dispute between MBQ and Waste Management as to how much success MBQ obtained as a result of the decision of the Tribunal. However, it is not disputed that the Tribunal made numerous orders and directions with respect to water quality monitoring and testing. Chief Maracle's affidavit at paragraph 38 sets out three pages of remedial orders from the Tribunal, including water quality monitoring and testing both of ground water and wells, and the replacement of numerous wells on residential properties in the vicinity.

The Costs Decisions

[7] In accordance with the directions of the Tribunal, MBQ made its costs submissions in writing, seeking costs for its participation in the hearing and in the mediation and pre-hearings that preceded the hearing. MBQ sought about $445,000 for its costs incurred over a decade of involvement. The costs included expert reports and legal fees, both during and prior to the actual hearing.

The Legislative Scheme

[8] Before considering the issues at this hearing, it is important to review the legislative scheme and the Tribunal's authority to order costs.

[9] Costs are dealt with at paragraph 17.1 of the SPPA, which provides:

17.1(1) Subject to subsection (2), a tribunal may, in the circumstances set out in rules made under subsection (4), order a party to pay all or part of another party's costs in a proceeding.

(2) A tribunal shall not make an order to pay costs under this section unless,

(a) the conduct or course of conduct of a party has been unreasonable, frivolous or vexatious or a party has acted in bad faith; and

(b) the tribunal has made rules under subsection (4).

(Emphasis added)

(3) The amount of the costs ordered under this section shall be determined in accordance with the rules made under subsection (4).

(4) A tribunal may make rules with respect to,

(a) the ordering of costs;

(b) the circumstances in which costs may be ordered; and

(c) the amount of costs or the manner in which the amount of costs is to be determined…

[10] The Environmental Review Tribunal has made its own rules regarding costs in accordance with the guidance provided by the SPPA. Rule 212 sets out the policy objectives of the Tribunal's costs rules. Rule 217 indicates that a party seeking costs bears the onus of proof. Rule 218 establishes the level of detail that must be provided with costs submissions.

[11] Rule 225 reflects section 17.1 of the SPPA and states:

225. Under section 17.1 of the Statutory Powers Procedure Act, the Tribunal may only order costs to be paid if the conduct or course of conduct of a Party has been unreasonable, frivolous or vexatious or if a Party has acted in bad faith.

It is expected that the power will only be used in the rare case where a Party's conduct warrants such an award. In determining an award of costs under this Rule, the Tribunal may consider, among other things, the conduct of the requesting Party as well as whether the Party against whom a costs award is sought:

(a) failed to attend a Hearing or to send a representative when properly given notice, without contacting the Case Co-ordinator;

(b) failed to co-operate, changed a position without notice, or introduced an issue or evidence not previously mentioned;

(c) failed to act in a timely manner;

(d) failed to comply with the Tribunal's Rules or procedural orders;

(e) caused unnecessary adjournments or delays or failed to prepare adequately for Hearings;

(f) failed to present evidence, continued to deal with irrelevant issues, or asked questions or acted in a manner that the Tribunal determined to be improper;

(g) failed to make reasonable efforts to combine submissions with Parties of similar interest;

(h) acted disrespectfully or maligned the character of another Party; and,

(i) knowingly presented false or misleading evidence.

[12] Rule 226 further provides:

The Tribunal is not bound to order costs when any of the instances listed in Rule 225 occurs, nor does the Tribunal have to find that one of the instances occurred in order to conclude that the conduct of a Party has been unreasonable, frivolous or vexatious, or that a Party has acted in bad faith…

The Impugned Conduct of Waste Management Canada Corporation

[13] MBQ submits that it was unreasonable for Waste Management to require a hearing, and further that conduct during the hearing, although reasonable, ought to be considered unreasonable given the special status of MBQ. MBQ does not suggest that Waste Management acted in bad faith or engaged in frivolous or vexatious conduct.

[14] In addition to providing a history of the issues surrounding the MBQ and the Richmond Landfill Site, Chief Maracle pointed to a number of issues that ought to have been considered with respect to MBQ's status, which can be summarized as follows:

• The proximity of the Reserve to the Richmond Landfill.
• The water courses in the area and the potential for toxic leachate.
• The financial constraints and impact on MBQ made necessary by its intervention with the engagement of scientific and legal representation.
• The history of concerns about safe drinking water not only to MBQ, but to First Nations communities across Canada.

[15] MBQ further summarizes the issues on appeal at paragraph 38 of its Factum:

This appeal then raises the following issue:

Did the Tribunal err in law by failing to consider and apply its Costs Decision and Review Decision the "polluter pays" principle, together with the Constitutionally protected rights and other rights of the MBQ, including but not limited to:

(a) the MBQ's status as a First Nation;

(b) the Honour of the Crown;

(c) the lands held by the MBQ, including its Reserve Lands under the Indian Act and those subject to Land Claims, and the nature of the holding of these Lands and Claims;

(d) the historic disadvantages suffered by the MBQ and other First Nations;

(e) the risks the MBQ community faces, being largely dependent on drinking water wells, ground and surface water known to be impacted by the lands and actions of Waste Management, along with the historic impacts and damages to water supplies suffered by the MBQ and other First Nations;

(f) the MBQ's severely limited financial resources; and

(g) the public interest issues raised by this matter.

The Costs Decision

[16] After receiving written submissions, the ERT issued Costs Reasons on May 3, 2017, denying MBQ's request for costs. The Tribunal reviewed the legislative scheme as set out in the SPPA, and the Tribunal's own costs rules. It then considered its own jurisprudence, including Baker v. Ontario (Director, Ministry of the Environment) (2009), O.E.R.T.D. No. 29 at para. 40. The three-stage analysis for costs considerations as suggested by Baker was summarized in the recent decision of the Environmental Review Tribunal in Peel (Regional Municipality) v. Ontario (Ministry of the Environment and Climate Change) (2016), O.E.R.T.D. No. 16 at para. 28:

In Baker, the Tribunal noted, at para. 38, that it conducts a three-stage analysis in determining whether to grant an award of costs in such cases:

1. The Tribunal must first determine whether a party has engaged in unreasonable, frivolous, or vexatious conduct or acted in bad faith.

2. If so, the Tribunal then considers whether to exercise its discretion to award costs.

3. If the Tribunal exercises its discretion to award costs, the Tribunal then exercises its further discretion in determining the appropriate amount of the costs award.

[17] In its concluding paragraphs denying costs to MBQ, the Tribunal stated at paragraphs 110, 111 and 112:

[110] In summary, it is the Tribunal's determination that WMC has not engaged in unreasonable conduct. It is not unreasonable (or unusual) for a responding party to an appeal before the Tribunal to mount a defence to the appeal. In this case, WMC and other parties appear to have entered, voluntarily and in good faith, into a Tribunal-led mediation process. Through this process, the parties were able to resolve certain issues resulting in settlement agreements and the withdrawal of portions of the appeal, as set out in the Tribunal's order issued on April 26, 2013.

[111] The MBQ appear to submit that WMC should not have defended itself in these proceedings, and instead should have agreed to the MBQ's requests from the beginning. The Tribunal rejects this argument, however, and finds that it was not unreasonable conduct for WMC to respond to this appeal by defending its position, engaging in mediation and ultimately proceeding to a hearing on the outstanding issues. The MBQ did not provide the Tribunal with any case law in support of finding such conduct to be unreasonable.

[112] To conclude, therefore, the Tribunal finds that WMC has not engaged in unreasonable, frivolous or vexatious conduct or acted in bad faith.

[18] The Tribunal then found there was no need to go on to a stage two or three analysis, based on the Baker decision, having determined that there was no unreasonable conduct by Waste Management.

[19] In its decision, it is clear that the Costs Tribunal heard the representations from MBQ about its status as a First Nation community. As the Tribunal stated at paragraph 50:

The MBQ state that they are a First Nation community that is severely constrained by their limited resources. They submit that as a First Nation, the MBQ must be regarded differently than an impacted individual, municipality or corporation when considering the issue of costs. The MBQ cite a passage from Honouring the Truth, Reconciling for the Future: Summary of the Final Report of the Truth and Reconciliation Commission of Canada, 2015 ("Truth and Reconciliation Commission report"), which states that the central goals of Canada's Aboriginal Policy over a century were to eliminate Aboriginal governments, ignore Aboriginal rights, terminate the Treaties and cause Aboriginal peoples to cease to exist as distinct legal, social, cultural, religious and racial entities in Canada, through a process of assimilation that amounted to cultural genocide. The MBQ assert that the effects of this legacy remain and the heavy burden of disadvantages faced by First Nations must be considered when deciding costs.

[20] The Tribunal concluded its decision by stating, "At the first stage of analysis, a First Nation is in no different position than any other party".

[21] Although not considered at the first stage of the analysis, the Tribunal did discuss the matters raised by MBQ as a First Nation and found that those matters ought to be fully considered at stage 2.

[22] In upholding the decision of the costs panel, the review panel addressed this last issue at paragraph 49,

The Costs Panel did not state that MBQ itself was no different than any other party; rather, it said that MBQ was in no different "position" than any other party at the first stage of the costs analysis. Therefore, the Tribunal disagrees that the effect of the Costs Dismissal Order is for MBQ to lose any recognition as a First Nation…

[23] Significantly, the review panel stated at paragraph 61,

In this case, however, if one were to fully consider all of MBQ's general circumstances in assessing the reasonableness of Waste Management's conduct at the first stage of the analysis, MBQ has still failed to show that the costs panel would likely have reached a different decision, as required by Rule 238(b). Waste Management's basic course of conduct (ie: participating as a respondent, contributing to the settlement of many issues, and proceeding to a hearing on what issues remained), was neither unusual nor unreasonable regardless of MBQ's general circumstances…

Standard of Review

[24] The parties do not agree on the appropriate standard of review on this appeal. The MBQ submits that the standard is correctness. As it sets out in its Factum at paragraph 41,

In the MBQ's respectful submission, the issue raised in this appeal relates to the application of the SPPA regarding costs, and the role of First Nations and their status in determining costs. This determination will apply to all SPPA governed bodies and all First Nations. The Tribunal has no identifiable expertise in this area. Consequently, this is a question of general law to be adjudicated on the standard of correctness.

The MBQ submits that the Tribunal erred in law by failing to recognize the "Polluter Pays" principle and the rights of First Nations.

[25] Waste Management submits in paragraph 37 of its Factum,

The appropriate standard of review by this Court of a decision of a Tribunal which interprets or applies its own statute or a statute closely connected to its function is reasonableness.

[26] As Rothstein J. stated for the majority in Alberta (Information and Privacy Commissioner) v. Alberta Teacher's Association, 2011 SCC 61, [2011] 3 S.C.R. 654 at paragraph 39,

…When considering a decision of an administrative tribunal interpreting or applying its home statute, it should be presumed that the appropriate standard of review is reasonableness…

[27] I am satisfied that the appropriate standard of review is reasonableness, given that both the Tribunal and Review Panel were exercising their discretion and interpreting their home statute and its own jurisprudence.

Issues

[28] There are two issues: whether Waste Management's response to the appeal was unreasonable and whether or not the "Polluter Pays" principle ought to apply.

"Polluter Pays" Principle

[29] MBQ submits that the "Polluter Pays" principle ought to be applied when costs are considered. MBQ and the other respondents achieved a certain level of success when orders for environmental conditions, such as monitoring, testing and well replacement are considered.

[30] However, I am satisfied that the "Polluter Pays" principle has no application to costs considerations, given the statutory regime of the SPPA and the Tribunal's own rules. Unlike the Rules of Civil Procedure, it cannot be said that costs follow the event; it is just the opposite. As Rule 225 states: "…The Tribunal may only order costs to be paid if the conduct or course of conduct of a party has been unreasonable, frivolous or vexatious, or if a party has acted in bad faith." In this case, the "Polluter Pays" principle is part of the Tribunal's original decision imposing conditions and obligations upon Waste Management.

Requirement for Unreasonable Conduct

[31] In its decision, the Tribunal noted the numerous disadvantages facing MBQ arising from its status as a First Nation and the historic disadvantages suffered by First Nations people. But those considerations, it determined, should not affect the first stage of the analysis under the Baker test. MBQ's submission is that reasonable conduct during the course of a proceeding can be considered unreasonable when the historical disadvantages of First Nations people are considered.

[32] The Tribunal's reasons for decision are not well-worded when discussing the relevance of the First Nations issues raised by the MBQ. It is certainly possible that the matters raised by the MBQ could be relevant to the first stage of the analysis under the Baker test.

[33] At the core of the MBQ's position is the submission that it was important to the MBQ to intervene in the appeal. It was important because of the specific impact of the decision under appeal, because that impact was made more significant given the special status of the lands in question and because of other matters that are important to First Nations. Not only was the intervention important, but it was to some extent successful. I accept all of this, which would be relevant to a costs regime that was based on these factors. However, the Legislature has rejected that type of cost regime. Under the cost regime that applies here, costs are to be the rare exception and arise only from misconduct. This regime protects all parties to this type of proceeding from exposure to pay a cost award unless they have in the course of the appeal proceeding engaged in misconduct that falls within the SPPA and related Rules.

[34] In this case, there have been no submissions suggesting any of the types of misconduct that would result in a costs award. Rule 225 provides a non-exhaustive list of examples of the types of conduct that would be regarded as unreasonable, none of which are alleged here. While that list is not determinative, it does illustrate the types of conduct that could attract such an order. There is no submission that there was misconduct that wrongly lengthened the hearing or made it more costly. This was a lengthy hearing, but it involved a number of parties putting forward different interests, resulting in different components of the order ultimately made.

[35] In essence, the MBQ submits that Waste Management should not have defended the appeal on the MBQ issues at all, and should have settled the MBQ issues either at the mediation or, in any event, before a hearing was required.

[36] The Tribunal gave consideration to this issue and noted MBQ's submission at paragraph 100 that:

…it was unreasonable for WMC to require the MBQ to engage in a lengthy, expensive proceeding; and WMC exacerbated the MBQ's vulnerable position by forcing them to go through the hearing rather than addressing their issues at the outset…

[37] However, as the Tribunal stated at paragraph 109,

…Parties to mediation, while attempting to reach agreement, may ultimately take different views, and proceed to a hearing. This is common in litigation, and the Tribunal finds that it is not indicative of unreasonable conduct.

[38] In this case, a number of issues were resolved at the mediation, resulting in consent orders that were made in advance of the hearing.

[39] With respect to its jurisdiction toward costs for a party's conduct prior to the hearing, the Tribunal stated at paragraph 103,

…The Tribunal observes that all types of conduct listed [in Rule 226] relate to a party's conduct in relation to the Tribunal hearing process and the procedural steps accompanying that process. The Rules governing costs are clear that all costs must relate to a "proceeding" before the Tribunal which is defined in Rule 3 as including a hearing and referring to all matters before the Tribunal in respect of an appeal, application or referral.

[40] In submissions, both MBQ and Waste Management made reference to the decision of the Divisional Court in Chesterman Farm Equipment Inc. v. C.N.H. Canada Ltd., 2016 ONSC 698. In addition, counsel noted this case had been argued at the Court of Appeal and was under reserve. That decision dealt with a lengthy hearing before the Agriculture, Food and Rural Affairs Appeal Tribunal. On the facts of that case, the Divisional Court set aside the costs decision of the Tribunal, which awarded costs for unreasonable conduct prior to the hearing itself. The Court considered the provisions of s. 17.1 of the SPPA and that Tribunal's own rules as to what constitutes unreasonable conduct. The Court concluded at paragraph 186,

…In awarding costs against CNH, the Tribunal relied upon its previous finding that CNH's conduct in ending the Dealer

Agreement with Chesterman was "unreasonable", which it said satisfied the second criteria. This is a legal error. Conduct that relates to the subject matter of the proceeding (i.e. breach of contract) is not a basis for an award of costs under the Tribunal's Rules or s. 17.1 of the SPPA.

[41] There has been no finding that Waste Management conducted itself unreasonably in relation to the proceeding before the Tribunal. Indeed, the Tribunal had no criticism of Waste Management's conduct of the appeal. The Tribunal's decision to refuse the cost award against Waste Management was reasonable. It was within the range of acceptable outcomes to find that MBQ's conduct was not unreasonable in the circumstances. The Tribunal's decision not to award costs is owed deference.

Conclusion

[42] For reasons set out above, the appeal is dismissed.

[43] If the parties are unable to agree on costs, then Waste Management may make brief submissions in writing, not exceeding five (5) pages, within thirty (30) days of the release of these Reasons. MBQ shall then deliver responding submissions not exceeding five (5) pages, within fifteen (15) days of the delivery of Waste Management's submissions. Waste Management will then have a brief right of reply to be delivered within ten (10) days.

[44] As agreed at the hearing, no costs are sought by or against the Director, Ministry of the Environment and Climate Change.

___________________________ Mulligan J.

I agree

Marrocco A.C.J.S.C.

I agree

Matheson J.

Date of Reasons for Judgment: 20180320

2018 ONSC 1929

DIVISIONAL COURT FILE NO.: 298/17 DATE: 20180320

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

MARROCCO A.C.J.S.C., MULLIGAN and MATHESON JJ.

BETWEEN:

MOHAWKS OF THE BAY OF QUINTE

Appellant

• and –

DIRECTOR, MINISTRY OF THE ENVIRONMENT, WASTE MANAGEMENT OF CANADA CORPORATION, TYENDINAGA AND ENVIRONS and NAPANEE GREEN LIGHTS

Respondents

REASONS FOR JUDGMENT

Mulligan J.

Date of Reasons for Judgment: 20180320