ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO. 01-CV-221941CM
DATE: 20120329

BETWEEN: RALLION GENTLES and JOSEPH FRANCIS (Plaintiffs)

AND : CITY OF TORONTO NON-PROFIT HOUSING CORPORATION, TORONTO HOUSING COMPANY INCORPORATED, INTELLIGARDE INTERNATIONAL INCORPORATED, JASON COLLINS, JAMIE BARNES, SHARI MALAZDREWICZ, JACK DOE, JERRY DOE and JEFF DOE (Defendants)

BEFORE: M.A. SANDERSON J.

COUNSEL:
Mr. Andrew Evangelista for the Defendants
Mr. David Gomes for the Solicitor

E N D O R S E M E N T re C O S T S

[ 1 ] After the retirement of Lane J., I was asked to deal with unresolved costs issues in action 01-CV-221941CM. On March 6, 2006, after a trial by jury, Lane J. had dismissed the action.

[ 2 ] Counsel for Intelligarde brought a motion seeking an order that the Plaintiffs' lawyer pay costs. By endorsement released February 3, 2009, I declined to make that order. I specified that there would be no costs of that motion.

[ 3 ] I then dealt with the Defendants' claim for costs totalling $498,421.56 on a substantial indemnity basis or, in the alternative, $336,290.77 on a partial indemnity basis.

[ 4 ] For reasons contained in my Endorsement dated November 2, 2009 ( [2009] O.J. No. 4871 ), I made no order as to costs of the action.

[ 5 ] The Plaintiffs appealed Lane J's dismissal of the action. The Defendants cross-appealed my order as to costs.

[ 6 ] For reasons released on November 26, 2010, the Court of Appeal allowed the appeal, set aside the Judgment of Lane J. and gave judgment to the Plaintiffs against the Intelligarde Defendants for false arrest for trespass and awarded the Defendants damages totalling $56,500 as assessed by the jury.

[ 7 ] The Ontario Court of Appeal dismissed the cross-appeal, awarded costs of the trial to the Plaintiffs and remitted determination of those costs to me.

[ 8 ] Counsel have recently asked me to determine those costs and have made submissions. Now that the shoe is on the other foot, the Plaintiffs are seeking to recover costs of $443,375.12 against Intelligarde on a full indemnity basis, or in the alternative on a substantial indemnity basis of $406,623.13. They also seek a premium and an inflationary increase.

[ 9 ] Now it is counsel for the Defendants who is submitting that the Plaintiffs' claims for costs are greatly excessive, given inter alia the "minor" award of damages for false arrest and trespass only and not for punitive damages and the principle of proportionality.

[ 10 ] While counsel for the Plaintiffs acknowledged that substantial indemnity costs should be awarded only in exceptional cases, and full indemnity costs only in very exceptional cases, he submitted that the present case is a very exceptional case or, at the least, an exceptional case.

[ 11 ] Counsel for the Plaintiffs submitted the Reasons of the Court of Appeal, the prior rulings of this court on costs, the factors under Rule 57, the nature of the allegations and issues, the public interest in the issues, the findings of the jury, the complexity of the case, the good faith of the Plaintiffs, the pressing concern to ensure access to justice, the need for the courts to prevent abuses of its processes, and the manner in which the Defendants conducted the litigation, make an order of costs representing full indemnity or, in the alternative, substantial indemnity, reasonable and appropriate in the circumstances.

[ 12 ] He submitted that at paragraph 92, the Court of Appeal commented that Intelligarde’s reliance on its “standard practice” was "flawed from the beginning." Intelligarde did not have "an objectively reasonable basis for believing that Gentles and Francis were trespassers rather than residents."

[ 13 ] Counsel for the Plaintiffs submitted that Intelligarde advanced a meritless position from the outset. It should not have disputed liability.

[ 14 ] Counsel for Intelligarde submitted inter alia that the "vast majority" of the costs claimed by the Plaintiffs related to failed allegations that Intelligarde was a company of “bad character and reputation” that encouraged violence and illegal arrests to promote its business, and was accordingly independently negligent on the facts of this case, and that it was involved in a continuing conspiracy to harass Gentles. They claimed punitive damages based on those allegations.

[ 15 ] The Jury rejected those claims.

[ 16 ] Counsel for Intelligarde submitted that the Plaintiffs’ claim for costs should be determined on a partial indemnity basis and fixed in the amount of $100,000.00, inclusive of disbursements and interest.

[ 17 ] Counsel for Intelligarde submitted that its earlier claim for costs of $498,421.56 included the costs the Defendant, Toronto Housing, was seeking. The Plaintiffs' appeal against Toronto Housing was dismissed by the Court of Appeal. The costs claimed by Toronto Housing are irrelevant to the costs Intelligarde should be required to pay to the Plaintiffs.

[ 18 ] In the alternative, the costs of the Plaintiffs ought to be assessed on a partial indemnity basis [on which basis the Plaintiffs claim $276,040.64.]

[ 19 ] Counsel for the Intelligarde Defendant submitted that the costs of many of the steps in the proceeding for which the Plaintiffs seek reimbursement have already been addressed by the respective Courts before whom those steps were taken. The Plaintiffs are not entitled to revisit those costs and recover any amount in relation to those steps. Much of the time spent was unnecessary and unduly lengthened the proceedings.

[ 20 ] Counsel for Intelligarde also submitted the overall objective of the process should be to fix an amount that is fair and reasonable having regard to the factual matrix of the case. The quantum should reflect an amount that is fair and reasonable rather than any exact measure of the actual costs to the successful party.

[ 21 ] Section 131 of the Courts of Justice Act provides:

131(1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.

[ 22 ] Rule 57.01 of the Rules of Civil Procedure sets out the factors a court may consider in making a costs award:

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.

[ 23 ] The general rule is that costs on a substantial indemnity basis should not be awarded unless special grounds exist to justify a departure from the partial indemnity scale.

[ 24 ] Cost awards must be fair and reasonable. The reasonable expectations of the losing party are relevant.

[ 25 ] The decision of the Divisional Court in Andersen v. St. Jude Medical, Inc. , 2006 85158 (ON SCDC) , [2006] O.J. No. 508, 208 O.A.C. 10 (Ont. Div. Ct.), contains the following:

26 Nordheimer J. ... in Hague v. Liberty Mutual Insurance Co. , 2005 13782 (ON SC) , [2005] O.J. No. 1660 (S.C.J.) (QL), ...a post- Boucher decision, in asking … how the reasonable expectations of the parties are to be found out as part of the costs process, he states at para. 15:

...it would appear that the expectation of the parties will fall to be determined in one of two ways. It may be determined by the unsuccessful party revealing what his/her/its costs were on the same matter as some measure of what was expected. The unsuccessful party is, of course, not required to reveal that information, but, if they choose not to do so, they may impair their ability to make any meaningful submissions on this aspect of the process. (emphasis added). The other method and these are not mutually exclusive, is for the court to discern the likely expectation of the parties through the use of the factors to which courts have historically had reference in determining the appropriate amount of costs, some of which factors are set out in Rule 57.01. These include the nature of the motion, the importance of the issues raised in relation to the overall proceeding, the complexity of the issues, the conduct of the parties, and the actual costs incurred by the successful party.

55 A final submission advanced by the defendants is that an award of this magnitude will have a chilling effect on class proceedings. We do not find this submission compelling in circumstances where the defendants, at least initially, drove the plaintiffs into a game of high stakes poker, sparing no expense in marshalling evidence and then declined to put their own costs before the court. Having lost a very expensive and important motion, it is disingenuous for the defendants to now claim that the costs award is outside the range of what they reasonably expected. If the plaintiffs had lost the motion, it similarly would not lie in their mouths to make this submission.

[ 26 ] In Canadian National Railway Co. v. Royal & SunAlliance Insurance Co. of Canada (2005), 2005 33041 (ON SC) , 77 OR (3d) 612 (SCJ), the court compared the fees charged to the defendant and the costs claimed by the plaintiffs in determining the reasonable expectations of the unsuccessful defendants.

[ 27 ] Because Intelligarde was originally successful at trial and made submissions on costs expectations at that time, there is evidence here about its own expectations at the time.

[ 28 ] In its costs submissions dated March 31, 2006, counsel for Intelligarde submitted at paragraph 28 that “[t]he outcome of this action was very important to the Defendants…”

[ 29 ] In R. v. Asante-Mensah 2003 SCC 38 , [2003] 2 SCR 3, the Supreme Court of Canada held as follows:

24 …the implications of recognizing a power to use force in effecting an arrest under the TPA go far beyond the present context. Countryside ramblers come face to face with farmers. Teenagers occasionally upset mall owners who think adolescents "hanging out" deter business. Drifters seek shelter in railway stations. Protesters march their placards onto the private property of a target business. The list of potential confrontations goes on.

25 In recent years, provincial legislation such as Ontario's TPA has become the primary legal basis upon which private security firms and the like monitor and control activities on private properties. Intelligarde, one of Ontario's largest private security firms, estimates that its guards have arrested over 30,000 people in the last 20 years on the basis of the TPA (R. McLeod, Parapolice: A Revolution in the Business of Law Enforcement (2002), at p. 67). G. S. Rigakos writes that "the most well-worn piece of legislation for Intelligarde staff is the Trespass to Property Act. It provides them with broad powers of arrest on private property and is the statute of choice among a litany of provisions making it very easy for private security guards to arrest citizens in Ontario" ( The New Parapolice: Risk Markets and Commodified Social Control (2002), at pp. 52-53).

26 The power of arrest is a potent weapon to put in the hands of landowners and occupiers to be wielded in protection of their private property. Whether or not force is used, the liberty of the person arrested is compromised... When so much of the space where the modern community gathers, including airports and shopping malls, is in private hands, there is legitimate controversy about the nature and scope of the occupier's arrest power (see R. Anand, Task Force on the Law Concerning Trespass to Publicly-Used Property as it Affects Youth and Minorities (1987), at pp. 81 et seq. ; P. C. Stenning and C. D. Shearing, Search and Seizure: Powers of Private Security Personnel (1979), at p. 75 (study paper prepared for the Law Reform Commission of Canada)).

71 Many trespasses are of trivial importance. They are best handled by means short of an arrest. This was recognized in the 1987 Ontario Ministry of the Attorney General's paper This land is whose land?, supra , at pp. 14-15:

An arrest is a grave imposition on another person's liberty and should only be attempted if other options prove ineffective. Further, an arrest attempt may lead to a confrontation more serious than the initial offence of trespass, and should be exercised with caution.

[ 30 ] I note that in Schaeffer v. Wood , 2011 ONCA 716 , involving an SIU investigation, the Court of Appeal recently awarded costs of $100,000.00. In that case a declaration was made that police officers did not have the right to "have a lawyer … assist them in the preparation of their notes," but did have "the right to obtain legal advice as to the nature of their rights and duties with respect to SIU investigations, provided that obtaining such advice [did] not impede the completion of their notes before the end of their tour of duty."

[ 31 ] There was obviously no monetary award.

[ 32 ] Under Rule 57.01, the principle of proportionality must be considered along with the reasonable expectations of the parties. Generally speaking, costs should bear some reasonable proportionality to the amount of money awarded to the plaintiff as damages.

[ 33 ] An unsuccessful party should not be held fully responsible to pay the costs of the successful party where the time spent on the matter has been clearly excessive or where the matter has been overly lawyered.

[ 34 ] At the same time, in my view, the concept of proportionality does not stand for the proposition that there must always be a cap on costs based on some ratio between the monetary award and the recoverable costs.

[ 35 ] While proportionality is very important, other factors must be considered as well.

[ 36 ] Proportionality is not the end but a means to ensure access to justice.

[ 37 ] In Bonaiuto v. Pilot Insurance Co . 2010 ONSC 1248 , A.L. Harvison Young J. ordered substantial indemnity costs of $75,932.23 even though the successful plaintiff recovered only $5000, a ratio of 15:1.

1 -- This case arose as a result of the Defendant Insurer's refusal to pay a claim of $22,424.00 for theft and damage to their car and stereo equipment. The Defendant vigorously asserted that the claim was fraudulent. The Plaintiff sought punitive damages. Following a week long trial, the jury returned a verdict for the Plaintiff, but awarded only $5000 in damages and declined to award punitive damages.

10 Fifth, the Defendant claims that the amount sought is excessive. It asserts that the trial was a short one and that costs awarded should be minimal. I disagree. As I have noted above, the positions taken by the Defendant made the decision to press on to trial reasonable. I also note that the Defendant did not submit a Bill of Costs and accordingly the Court has no way of knowing what costs it would have sought had it been successful. The action was brought in March, 2004 and continued over 5 years and 9 months until trial. The Defendant examined both the Plaintiff and her husband. Having reviewed the Bill of Costs, and the criteria set out in Rule 57.01 of the Rules of Civil Procedure, I am satisfied that the claim of $71,259.06 (inclusive of costs and GST) is reasonable in the circumstances.

[ 38 ] In Cimmaster v. Piccione, , 2010 ONSC 846 , Gray J. held:

[19] Finally, I do not accept, as contended by MTC, that in the circumstances of this case such an amount is disproportionate. The principle of proportionality is important, and must be considered by any judge in fixing costs. Indeed, I have had occasion to apply the principle even before the promulgation of the recent Rules amendments that specifically require it to be considered: see Pitney Bowes of Canada v. Noia , [2009] O.J. No. 4822 (S.C.J.) . However, in my view, the principle of proportionality should not normally result in reduced costs where the unsuccessful party has forced a long and expensive trial. It is cold comfort to the successful party, who has been forced to expend many thousands of dollars and many days and hours fighting a claim that is ultimately defeated, only to be told that it should obtain a reduced amount of costs based on some notional concept of proportionality. In my view, as was the case in Pitney Bowes, the concept of proportionality appropriately applies where a successful party has over-resourced a case having regard to what is at stake, but it should not result in a reduction of the costs otherwise payable in these circumstances.

[ 39 ] I accept that a claim for $443,375.12 is disproportionate to a monetary recovery of $56,500.00. However, for reasons given earlier, that is not the only relevant consideration.

[ 40 ] While counsel for the Defendant now submits this should have been a relatively simple case of wrongful arrest for trespass and assault, with an assessment of damage for very minor injuries, as already noted, its earlier submissions on costs and Asante-Mensah make it clear that its ability to use a power to arrest is "the primary legal basis upon which private security firms monitor and control activities on private properties" (paragraph 25.) The legal issue to be determined was therefore of significant importance to Intelligarde.

[ 41 ] On November 2, 2009, I held as follows:

[25] Having reviewed large portions of the transcript it is obvious to me that the Defendants must take some responsibility for the length of trial. Their strategy throughout was to object at every turn. They repeatedly made objections and slowed the pace of trial.

[ 42 ] At the same time, I accept several of the cost submissions of counsel for Intelligarde. The Order of Master Egan, dated September 24, 2002 awarded costs payable to the Plaintiffs in the amount of $750.00. Coo J on February 10, 2003, set aside the Order of Master Egan, dated September 24, 2002, and awarded the amount of $3,000.00, plus GST, for all costs involved before all judicial officers in that Appeal to the Defendants, in the cause. Counsel for Intelligarde submitted that the costs related to that Motion and Appeal have already been determined and are not properly claimed here. Master Egan, on November 18, 2003 ordered costs of the Motion be payable to the Defendants by the Plaintiffs in the amount of $1,250.00 by February 18, 2004. I accept the submission of counsel for Intelligarde that any costs related to that motion have already been addressed by Master Egan and are not properly claimable here.

[ 43 ] In dismissing the Intelligarde motion for an order that Plaintiffs’ counsel pay costs personally, I ordered no costs to either party. The costs of that Motion have already been addressed by this Court.

[ 44 ] Some, but not all of these costs were excluded from the Plaintiffs' Bill of Costs. For instance, claims for costs related to the 2002 motion to strike the entire Statement of Claim and a further Motion in November of 2003 seeking again to strike the Statement of Claim were apparently excluded from the Bill of Costs as costs previously determined by another Court.

[ 45 ] Counsel for Intelligarde submitted the Jury specifically found that there was no negligence on behalf of Intelligarde International that proximately caused or contributed to the injuries of the Plaintiffs. The Plaintiffs were not awarded punitive damages. These findings were not appealed by the Plaintiffs. The Plaintiffs’ pursuit of these allegations consumed the vast majority of Trial time. The Trial should have been completed within two weeks, the original estimate provided by all counsel. In addition, a mistrial was ordered after the first opening statement of Plaintiffs’ counsel, an unsuccessful motion to re-open the Plaintiffs’ case was brought three weeks into the trial involving a prolonged voir dire during which two witnesses testified. These issues significantly lengthened the Trial.

[ 46 ] I have considered the submission of counsel for the Defendant that there were about 9 Trial days where issues were addressed that were resolved in favour of Intelligarde, and that the costs of these days of Trial should have been deducted from the Plaintiffs’ claim for costs.

[ 47 ] I have considered the Defendants’ Offers to Settle to Gentles, all of which were less than the amount assessed by the Jury. No offers to settle were made complying with Rule 49.

[ 48 ] In all the circumstances here, I am of the view that costs on the partial indemnity scale are appropriate. On that basis, the Plaintiffs claim $276,040.64.

[ 49 ] That total includes some time for matters for which costs dispositions have already been made as detailed earlier. Those costs are not recoverable by the Plaintiffs.

[ 50 ] While distributive awards of costs are not usually in order, Rule 57.01.4(a) gives this Court authority to award or refuse costs in respect of a particular issue or part of a proceeding.

[ 51 ] I accept the submission of counsel for the Defendants that the Plaintiffs' conduct of the action tended to prolong the litigation.

[ 52 ] On the issue of proportionality, the Plaintiffs have recovered $56,500 + interest.

[ 53 ] I find that the importance of this matter to all parties transcended this amount. At the same time, a six week trial cannot be considered proportionate.

[ 54 ] Apart from interest from the date of the judgment in 2006, I do not think either a premium or an inflation adjustment is appropriate. Despite the remission of the issue to me in November 2010, neither counsel sought to have the costs issue resolved until recently.

[ 55 ] In all the circumstances, I am of the view that fees of $195,000 plus taxes plus post-judgment interest from the date of the judgment at the statutory rate plus disbursements of $10,858.71 are appropriate and so order.

M.A. SANDERSON J.

Released: