Court File and Parties

Court File No.: 07-31226
Date: 2012-07-03
SUPERIOR COURT OF JUSTICE - ONTARIO

RE: ZORAN PANKERICHAN et. al, Applicants

AND:

RT. REV. BISHOP GEORGIJE DJOKIC, et al., Respondents

BEFORE: The Honourable Mr. Justice R. B. Reid

COUNSEL:
J-D Giacomelli and R. Phalavong, Counsel, for the Applicants
M. Protich, Counsel, for the Respondents

HEARD: January 31, February 1 and 2, 2012

COSTS ENDORSEMENT

[ 1 ] The applicants sought a declaration that elected trustees of their church-school congregation hold properties in trust and have authority to manage and deal with the properties.

[ 2 ] As well, they sought a declaration that the actions of the Bishop (acting on behalf of the diocesan authorities) dismissing an elected Executive Board and appointing a temporary trusteeship constituted a wrongful invasion of the trust.

[ 3 ] Finally, they sought an order reinstating the elected Executive Board, requiring new elections, and for an accounting and proper reporting by the temporary trusteeship as to its activities since September 1, 2005.

[ 4 ] By decision dated April 23, 2012, the application was dismissed.

[ 5 ] Costs submissions were received from both parties. The respondent seeks partial indemnity costs to the date of an offer to settle and substantial indemnity costs thereafter. The applicant requests no order as to costs given the complexity, novelty and general public importance of the matters litigated. In the alternative, it challenges the claim for substantial indemnity and the calculation of the partial indemnity amount.

[ 6 ] The applicant also notes that the litigation was between the applicants, who are individual members of a religious congregation, and the Bishop and diocesan authorities representing the Diocese of which the congregation and its members are a part. In a sense, a costs award is a shifting of financial responsibility amongst the same group of people, all of whom are engaged in a charitable and religious endeavour.

[ 7 ] The application was argued over the course of three days, following extensive document production and cross-examinations on affidavits. Substantial facta and briefs of authorities were filed by both parties. The matter was of obvious importance to each side, and a great deal of effort was expended in litigating the dispute.

[ 8 ] In exercising my discretion to award costs pursuant to section 131 of the Courts of Justice Act [1] , I must, of course, consider the factors set out in rule 57.01 of the Rules of Civil Procedure [2] and the provisions of rule 49.10(1) .

[ 9 ] The success of a party is the primary factor set out in rule 57.01 prior to the consideration of other matters. Its cousin is the principle of indemnity set out in sub-rule 57.01(1)(0.a). Clearly the respondent was successful in resisting the claim. It is not unreasonable to expect that the unsuccessful party in a matter which was as time-consuming as this one could reasonably expect to pay costs in a significant amount.

[ 10 ] Since the applicant has not provided a corresponding Bill of Costs, there is no reason to presume that the hours expended by the respondent with the hourly rates attributed to those hours were unreasonable or unnecessary.

[ 11 ] Although I do not agree that this matter was of great legal complexity, I acknowledge that the factual matrix was extensive in that it required a review of the parties’ history with one another over several years.

[ 12 ] Mention has already been made of the importance that both parties ascribed to the litigation.

[ 13 ] Under the “catch-all” provision of rule 57.01(1)(g), the applicants invite me to avoid the awarding of costs based on the case being a matter of general public interest and a novel point of law. In my view, and as expressed in my decision, the matter related to issues of control between the congregation and diocesan authorities in a hierarchical church which are not particularly novel or of wide public importance. Indeed, there is already a significant body of case law relating to the applicable legal principles to which both parties made reference. As to the notion that there should be a departure from normal costs consequences of litigation because of the common charitable purpose of the parties, I am not convinced that doing so would be fair. The likelihood of costs-shifting is a recognized component of litigation in Ontario. The potential of an adverse costs award is a commonly understood risk, the avoidance of which provides a settlement incentive regardless of the parties’ individual or corporate purpose.

[ 14 ] As result, there will be an order that the applicants pay the respondents’ costs.

[ 15 ] There are no factors alleged that would potentially justify the quasi-punitive consequences of a substantial indemnity costs award other than by virtue of the respondents exceeding the result proposed in a rule 49 Offer to Settle. The respondents did make an offer in November 2011 which was outstanding as of the date the motion was argued. In it, the respondents offered to call a special assembly of members in good standing of the congregation to elect a new Executive Board according to the bylaws of the congregation and the Statute of the Diocese. However, none of the 18 individual applicants would be allowed to stand for office for a period of one year. That latter provision was not found in the bylaws or the Statute.

[ 16 ] Unlike the case of a monetary award where the offer may be compared directly to the award, a claim for declaratory relief is more amorphous. There is either a declaration or not, and any offers tend to relate to other relief, as in this case. Although the respondents made an offer that attempted to solve the impasse, it is not possible to say that the applicants’ failure to accept it should attract the costs entitlement set out in rule 49.10(2). I am not satisfied that the respondents have satisfied their burden imposed by rule 49.10(3).

[ 17 ] The costs scale payable by the respondents will therefore be on a partial indemnity basis throughout.

[ 18 ] Although the applicants argued that the partial indemnity scale should be calculated at 40% of the substantial indemnity rate, a more normal approach is to use the 65% that is proposed by the respondents. That rate relates favourably to the gross up of 1.5 used to increase the partial indemnity rate to substantial indemnity under the former costs grid.

[ 19 ] Applying the 65% calculation to the entire costs claim of the respondents to achieve a partial indemnity award produces an amount of $76,375 for fees, plus disbursements (inclusive of tax) of $5,956.11. GST and HST are payable on the fees at the applicable rates. Since the rate of tax changed from time to time, I leave it to counsel for the respondents to provide the appropriate details and totals to the applicant.

[ 20 ] Therefore, there will be an order that the applicants pay to the respondents costs on a partial indemnity basis inclusive of disbursements of $82,331 plus applicable GST/HST on the fees.

Reid J.

Date: July 3, 2012

[1] R.S.O. 1990, c.C43 as amended

[2] R.R.O. 1990, Reg. 194 as amended.