Court File and Parties

Court File No.: C-867-11
Date: 2012-05-23
Superior Court of Justice - Ontario

RE: 1631370 Ontario Inc., Plaintiff

AND:

805352 Ontario Inc., Defendant

BEFORE: The Honourable Mr. Justice D. A. Broad

COUNSEL:
G. Edward Oldfield, for the Plaintiff
Gary L. Petker, for the Defendant

COSTS ENDORSEMENT

[ 1 ] By Reasons for Decision released April 13, 2012, I allowed the Defendant’s motion for summary judgment, dismissed the Plaintiff’s claim and invited the parties to make written submissions with respect to costs of the action and the motion. The following is my disposition with respect to costs.

[ 2 ] It is well-accepted on the authorities that the Court has a wide discretion in the determination of costs under Section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. Rule 57.01(1) sets forth the range of matters that the Court may consider in the exercise of its discretion.

[ 3 ] Typically costs follow the event on a partial indemnity basis, which is to say that, although there is no absolute entitlement to costs, normally costs are ordered to be paid by the unsuccessful party to the successful party on a partial indemnity scale [see Bell Canada v Olympia & York Developments Ltd. (1994), 1994 , 17 O.R. (3d) 135 (Ont. C.A.)]. On the quantum of costs, the overall objection has been stated to be “to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant” [see Boucher v Public Accountants Council (Ontario), 2004 , 2004 O.J. No. 2634 (C.A.) at paras. 24 and 26] .

[ 4 ] Counsel for the Plaintiff, Mr. Oldfield, submits that this action is a “test case that is of considerable importance to the public while also resolving a private matter between the parties” and that it would therefore be appropriate for the Court to exercise its discretion not to award any costs against the Plaintiff.

[ 5 ] I would observe that it has not been established that this was a “test case” in the conventional sense of a case selected to resolve a legal issue applicable to other pending or anticipated litigation [see Kerr v Danier Leather Inc. 2007 SCC 44 at para. 65] . At its highest, it would be more correct to describe the action as having a public interest component in that touches on the larger question, as characterized by the Plaintiff, of whether the Court should step in to regulate, through the application of common law principles, the distances between poultry or livestock operations, in circumstances where the legislature has not done so.

[ 6 ] It has been accepted that the public interest is an objective that may be served, in appropriate circumstances, by a costs order, in addition to other objectives such as indemnification of the successful party, encouraging settlement, discouraging frivolous proceedings and unnecessary steps in litigation, and preserving access to justice [see Guelph (City) v Wellington-Dufferin-Guelph Health Unit 2011 ONSC 7523 (SCJ) at paras. 14-15] .

[ 7 ] The case of Incredible Electronics Inc. v Canada (Attorney General) (2006) stands for the proposition that there are no categorical rules about the exercise of the Court’s discretion in cases of public-interest litigation but rather there are many relevant factors and every case must be decided in accordance with its own facts [see para. 73].

[ 8 ] Ducharme J. in St. James’ Preservation Society v Toronto (City) (2006) 2006 , 272 D.L.R. (4 th ) 149 (Ont SCJ) at para. 17 set out factors to be considered by the Court in determining whether an unsuccessful litigant should be excused from paying costs because it was acting in the public interest. These factors include:

(a) The nature of the unsuccessful litigant;

(b) The nature of the successful litigant;

(c) The nature of the dispute (the “ lis” ) – was it in the public interest?

(d) Has the litigation had any adverse impact on the public interest?

(e) The financial consequences to the parties.

[ 9 ] On the question of the nature of the Plaintiff, as the unsuccessful litigant, it was observed by Perell J. in Incredible Electronics at para. 91 that a public interest litigant must, in a dispute under the adversary system, take a side the resolution of which is important to the public. Here there was no evidence, other than that put forward by the Plaintiff’s expert Dr. Vaillancourt, that there was a wide public, or even industry-wide, interest in the issue being championed by the Plaintiff. Although having some financial stake in the outcome of litigation will not necessarily prevent a party from being considered a public interest litigant, it was clear that the Plaintiff’s primary interest was its own economic well-being connected with the preservation of its commercial relationship with its tenant.

[ 10 ] The Defendant, as the successful litigant, is not a large industrial or commercial enterprise with financial resources eclipsing that of the Plaintiff. On the contrary it is a small family-run operation which was seeking to establish a new agricultural operation in conformity with all regulatory requirements, on lands zoned for that purpose. Although Mr. Oldfield submits that the decision “represents a financial disaster for the Plaintiff”, a contrary decision could equally have represented a similar situation for the Defendant.

[ 11 ] The “lis” between the parties was simply whether the proposed operation of the Defendant represented an actionable nuisance to the Plaintiff. If it can be characterized as involving a broad public interest issue, the same, it is suggested, can be said of many actions founded on the law of nuisance involving potentially conflicting land uses. The purpose of the action was to shut down the Defendant’s operation, not on the basis that it represented a threat to the community or public generally, but rather, that it represented a threat specifically to the Plaintiff’s economic interests.

[ 12 ] If, as the Plaintiff suggests, the issue of airborne pathogens as between poultry operations is a pressing one, it was and remains open to the legislature to intervene to correct the mischief. Thus it is difficult to argue that the litigation has or will have an adverse impact on the public interest.

[ 13 ] Under the heading of the financial consequences to the parties, the factors which are to be considered are the relative abilities of the parties to pay costs and the relative impact on the parties of requiring, or not requiring, the unsuccessful party to pay the costs of the successful one [see Guelph (City) at para. 45] . There is nothing to suggest that the abilities of the parties to pay costs in this case are anything other than equivalent.

[ 14 ] I would therefore not apply a “public interest” or, as characterized by the Plaintiff, a “test case” consideration to refrain from making any order as to costs.

[ 15 ] The Defendant points to its Offer to Settle served October 24, 2011, providing for dismissal of the action, without costs, if accepted within five days of the date of the Offer to Settle, and partial indemnity costs to the Defendant thereafter. On the application of Rule 49.10(2), the failure of the Plaintiff to accept this Offer to Settle does not lead to the awarding of costs to the Defendant on greater than a partial indemnity scale.

[ 16 ] The Defendant argues that the circumstances of the action are such that it falls into the category of “rare and exceptional” cases where full indemnity costs should be awarded, on the basis that the Defendant was entirely innocent and abided by all applicable rules in establishing its business operation and should not be burdened by the expense of paying its own lawyer to defend an action which was without merit. Although this argument has its attraction, the same observations may be made in many situations involving dismissal of unmeritorious claims. The case law suggests that enhanced elevated costs are warranted in only two circumstances, namely, where there has been an Offer to Settle under Rule 49.10 and where there is a clear finding of reprehensive conduct on the part of the party against whom the costs award is made [see Davies v Clarington (Municipality) (2009), 2009 , 312 D.L.R. (4 th ) 278 (Ont CA) at paras. 31 and 40] .

[ 17 ] On the question of the amount of the costs to be fixed on a partial-indemnity basis, as indicated above, the Court is to consider what is fair and reasonable for the unsuccessful party to pay in the particular proceeding. As stated by Lauwers J. in the recent case of Sweda Farms Ltd. v Ontario Egg Producers 2012 ONSC 2240 (SCJ), citing the case of Moon v Sher (2004) 2004 , 246 D.L.R. (4 th ) 440 (Ont CA), an element to be considered is the losing party’s reasonable expectation as to the costs payable.

[ 18 ] Counsel for the Plaintiff Mr. Oldfield fairly acknowledges in his submissions that the costs outline of the Defendant represents on appropriate level of costs, with one caveat. He submits that the research conducted by Mr. Petker respecting poultry biosecurity and on the relevant case law, totalling 12.23 hours, should have been completed by a more junior person and not by senior counsel. Although the observation that work should generally be delegated down to the lowest competent level may have application to many, or even most, situations, I am not persuaded that, in the circumstances of this case, involving, on the submissions of Mr. Oldfield, an issue of some uniqueness, the research time was inappropriately expended or excessive.

[ 19 ] For the foregoing reasons it is ordered that the Plaintiff pay to the Defendant costs of the action and the motion fixing, on a partial-indemnity basis, in the sum of $24,767.02 inclusive of disbursements, plus HST.

D. A. Broad J.

Date: May 23, 2012