Court File and Parties

CITATION: NIAGARA-ON-THE-LAKE v. TWEED FARMS INC., 2020 ONSC 4248

COURT FILE NO.: DC-20-85

DATE: 2020/07/09

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: THE CORPORATION OF THE TOWN OF NIAGARA-ON-THE-LAKE, Moving Party

AND:

2470689 ONTARIO INC. and TWEED FARMS INC., Responding Parties

BEFORE: Justice D.A. Broad

COUNSEL: Callum Shedden and Brent K. Harasym, for the Moving Party

Russell D. Cheeseman and Stephanie Fleming, for the Responding Party 2470689 Ontario Inc.

Michael S. Polowin, Roberto D. Aburto and Carolina Campos for the Responding Party Tweed Farms Inc.

COSTS ENDORSEMENT

[1] The parties were unable to agree on the question of costs either at the conclusion of submissions or afterwards. The responding party Tweed Farms Inc. (“Tweed Farms’) delivered written costs submissions and The Town of Niagara-on-the-Lake (“NOTL”) delivered responding costs submissions. 2470689 Ontario Inc. (“2470689”) did not deliver written costs submissions, however, like each of the other parties, it filed a Costs Outline prior to the hearing of motion for leave to appeal.

Costs of Tweed Farms

[2] Tweed Farms seeks costs on a partial indemnity basis in the total sum of $36,701.06 comprised of $31,928.23 in respect of fees ($28,676.25 for pre-hearing preparation and $3,251.98 attendance fee on the hearing), HST thereon in the sum of $4,150.67 and $622.14 in respect of disbursements.

[3] Tweed Farms submit that the costs which it otherwise would have incurred were increased by three factors, namely: (1) unreasonable positions taken by NOTL which were subsequently abandoned; (2) that the motion proceeded on an expedited basis; and (3) the shut-down of normal court operations due to COVID-19.

[4] With respect to the first factor, Tweed Farms says that it incurred costs in conducting research and drafting materials in response to the following positions taken by NOTL which it later abandoned:

(a) that it would seek a stay of the Tribunal’s decision on an urgent basis, a position which was later abandoned 42 days after the decision was released;

(b) it insisted on the necessity for a motion to introduce fresh evidence in relation to the Notice of Constitutional Question that had been served on the Attorney General of each of Canada and Ontario, only to abandon that position during the case conference to set a timetable for the leave motion; and

(c) it refused to admit that aspects of its motion were rendered moot following service of the Notice of Constitutional Question.

[5] In respect of the second factor, Tweed Farms says that NOTL waited until the last possible date to serve its notice of motion for leave to appeal and did not serve its motion material until 43 days after the Tribunal’s decision was released. Conversely, Tweed Farms served its materials within two weeks after receiving NOTL’s materials in an effort to have the matter proceed promptly.

[6] Respecting the third factor, Tweed Farms argues that the learning curve associated with virtual hearings, resulting in increased costs, and ought to have been a reasonable expectation of the parties, particularly in light of the expedited nature of the proceeding.

[7] NOTL submits that the amounts claimed by Tweed Farms for costs are excessive and unreasonable. Moreover, the hourly rates for counsel utilized do not reflect the maximum rates found in Rule 57.01(3) of the Rules of Civil Procedure. It states that, in any event, the maximum rates should not apply as the motion was not complicated.

[8] NOTL submits that no motion for a stay of the Tribunal’s decision was brought and it is not reasonable for it to pay costs in reference to a motion that was never brought.

[9] NOTL denies that it insisted that a motion be brought to introduce fresh evidence but rather simply addressed the fresh evidence arguments in response to a letter from counsel for Tweed Farms.

[10] In conclusion. NOTL submits that based upon the reasonable expectations of the parties, Tweed Farms’ costs should be limited to $15,000, inclusive of HST and disbursements.

[11] The Court of Appeal has observed that modern costs rules are designed to foster three fundamental purposes: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlements; and (3) to discourage and sanction inappropriate behavior by litigants (see Fong v. Chan, 1999 2052 (ON CA), [1999] O.J. No. 4600 (Ont. C.A.) at para. 24).

[12] Importantly, the case law directs that a costs award must represent a fair and reasonable amount that should be paid, rather than an exact measure of the actual costs, must be consistent with what the unsuccessful party might reasonably have expected to have to pay, and must reflect some form of proportionality to the actual issues argued, rather than an unquestioned reliance on billable hours and documents created (see Mason v. Smissen, [2013] O.J. No. 4229 (Ont. S.C.J.) at paras. 5 and 6 and the cases therein referred to).

[13] NOTL made reference in its submissions to the observation of Wilson, J. in the case of Fernicola (In Trust) v. Creview Development Inc., 2009 492 (ON SCDC), 2009 492 (Div. Ct.) at para. 15 that “a standard award for costs on an unsuccessful motion for leave to appeal is in the vicinity of $3,500.00.”

[14] Price, J. in the case of Tucci v. Pugliese, 2010 ONSC 2144 (Div. Ct.) stated that he regarded Wilson J.'s finding as to a "standard award" to be then current and representative of the costs awarded in motions for leave to appeal of moderate complexity.

[15] It is evident from the Costs Outline filed by NOTL that it did not consider the case at bar to be a “standard” motion for leave to appeal. Its Costs Outline provided for partial indemnity costs totalling $14,548.90, comprised of $11,599.50 in respect of pre-hearing preparation, $577.50 appearance fee, HST on fees in the sum of $1,583.01 and disbursements in the sum of $788.89.

[16] I do not accept the submission of NOTL that the factors which Tweed Farms pointed to did not contribute to the overall time required be expended by its counsel in responding to the positions taken by NOTL. It is easy for a party who is called upon to pay costs to argue after the fact that time expended by the party seeking an award of costs turned out to be unnecessary or excessive. Counsel are required and entitled to respond realistically to issues that they are confronted within the course of the litigation. Their choices in this respect should not be unfairly discounted using the benefit of hindsight.

[17] I do accept that the partial indemnity hourly rates utilized by Tweed Farms for Messrs. Polowin and Aburto of $420 and $255 respectively are excessive and should more properly not exceed $350 and $225.

[18] The ultimate determination revolves around the principles of proportionality and reasonable expectations.

[19] The total pre-hearing time expended by the various counsel on behalf of Tweed Farms was 130.74 hours, compared to 70.3 hours for NOTL. The counsel time of Tweed Farms was therefore approximately 185% of that of NOTL.

[20] Although direct correspondence of time expended is unrealistic and not expected, a comparison is helpful in assessing reasonable expectations and proportionality.

[21] In my view, an award of costs in favour of Tweed Farms in the sum of $25,875 inclusive of fees, HST and disbursements would be considered reasonable and proportionate. This amount reflects 70% of Tweed Farms’ claimed partial indemnity fees together with HST thereon and its claimed disbursements.

Costs of 2470689

[22] According to its Costs Outline 2470689 appears to seek costs on a substantial indemnity basis in the total sum of $8,450, comprised of $5,650 in respect of pre-hearing fees and counsel fee for appearance of $2,800, plus HST thereon in the sum of $1,098.50 for a rounded total amount of 9,548.

[23] The Costs Outline does not set out any specific basis for a claim for substantial indemnity costs. As indicated above, 2470689 did not deliver any written submissions on costs.

[24] I am not able to infer from the facts that 2470689 made no written submissions on costs that it has abandoned any claim for costs. Having filed a Costs Outline, 2470689 was not required to deliver additional written costs submissions.

[25] I do not find any basis for an award of costs to 2470689 on a substantial indemnity basis.

[26] The Costs Outline of 2470689 sets forth a calculation of its pre-hearing fees on a partial indemnity basis totalling $3,390, reflecting 8.9 hours for senior counsel and 6 hours for junior counsel. Its counsel fee for attendance, at 66.66% of its substantial indemnity fee, would be $1,866.48. HST on the total fees on a partial indemnity basis would be $683.34 for a total of $5,939.82. I find this total amount, rounded to $5,940, to be reasonable and proportionate.

Disposition

[27] Based upon the foregoing, it is ordered that the Moving Party, The Corporation of the Town of Niagara-on-the-Lake, pay the following all inclusive amounts in respect of costs within 30 days hereof:

(a) $25,875 to Tweed Farms Inc.; and

(b) $5,940 to 2470689 Ontario Inc.

[28] This endorsement is effective from the date it was made and enforceable an order of the court without the need for an order to be prepared or approved by the parties and then issued by the court.

D.A. Broad, J.

Date: July 9, 2020