[3] The Township seeks partial indemnity costs of the application in the amount of $51,571.28 (all inclusive). In the alternative, if the court determines that no costs should be recoverable after the July 19, 2012 hearing date, the Township seeks costs in the amount of $40,185.34 (all inclusive including the sum of $1,000 previously ordered by Justice Conlan.

[4] Lystek seeks partial indemnity costs of the application in the amount of $69,496.26 (all inclusive).

[5] SPIRG submits that no costs should be payable.

ADDITIONAL RELEVANT BACKGROUND

(i) Lystek’s motion to dismiss for lack of standing

[6] At the beginning of the motion on July 19, 2012, Lystek sought a dismissal of SPIRG’s application on the basis that SPIRG lacked standing.

[7] I will not repeat what is set out in my Reasons. Lystek’s motion was dismissed.

[8] SPIRG was successful on this issue.

(ii) The addition of Lystek as a responding party

[9] SPIRG commenced this application against the Township. Lystek was not a named respondent.

[10] Lystek brought a motion seeking respondent party status. SPIRG did not oppose Lystek’s motion. As a result, Lystek became a responding party and participated fully throughout the proceeding.

[11] Mr. Kopp was added as a respondent party on July 19, 2012 with the consent of all parties. All parties felt it was necessary to have Mr. Kopp as a respondent given that it was his decision which had been appealed by SPIRG. The addition of Mr. Kopp is not significant to the issue of the entitlement or quantum of costs as Mr. Kussner representing the Township, continued to act on behalf of the Township and Mr. Kopp.

(iii) The position of the parties prior to the July 19, 2012 hearing

[12] Essentially, when the application was commenced, the position of SPIRG was that the Lystek Facility was not a "Dry Industry" within the meaning of the M1 Zoning By-law and as such, was not a permitted use on the subject property under the M1 Zoning By-law.

[13] The Township and Lystek’s position was that the Lystek Facility was a "Dry Industry" and therefore, a permitted use.

[14] Clearly the sole issue was whether this particular project, the Lystek Facility, was or was not a "Dry Industry."

[15] The Township and Lystek were successful on this issue.

(iv) The proceeding post July 19, 2012

[16] As noted in my Reasons, during the course of the hearing on July 19, 2012 a further issue emerged – whether s. 22.2(a) of the M1 Zoning By-law required, as a condition of being a permitted use, that the Lystek Facility be on municipal sewer and water service.

[17] The result was the adjournment of the hearing to September 4, 2012. Further materials were filed and cross-examinations took place.

[18] It was the position of the Township and Lystek that s. 22.2(a) of the M1 Zoning By-law imposed no such condition that the Lystek Facility be connected to municipal sewer and water.

[19] It was the position of SPIRG that s.22.2 (a) of the M1 Zoning By-law imposed the condition that the Lystek Facility be connected to municipal sewer and water.

[20] SPIRG was successful on this issue.

(v) The position of the parties on the appropriate remedy

[21] The Township and Lystek submitted that, if this Court determined s. 22.2 (a) of the M1 Zoning imposed a condition that the Lystek Facility be connected to municipal sewer and water, both parties would undertake to ensure there was no occupation or use of the Lystek Facility until this requirement was complied with by an order which prohibited the issuance of an Occupation Permit until the conditions were met.

[22] SPIRG’s position continued to be that, if this Court determined s. 22.2 (a) of the M1 Zoning imposed a condition that the Lystek Facility be connected to municipal sewer and water, the Building Permit should be "rescinded."

[23] The Township and Lystek were successful on the remedy granted.

SPIRG

[24] There is little information as to who or what SPIRG is or who are its members. This lack of information became central to the issue of standing. The issue of standing was resolved in favour of SPIRG as it was clear that, at least some of SPIRG’s members, consisted of "neighbours and residents of the Town who oppose the Lystek Facility" (para. 94 of the Reasons).

[25] The threshold to establish standing in an application such as this is not a high one. (para. 87 of the Reasons)

[26] While it was clear that some of SPIRG’s members consisted of neighbours and residents of the Township, there is no evidence as to;

a) the number of members of SPIRG;

b) how many residents of the Township are members of SPIRG; or

c) whether SPIRG members have a general interest regarding municipal by-laws or whether SPIRG members have a personal interest because of their proximity to the Lystek Facility.

[27] SPIRG has not filed any materials in this application. SPIRG has not filed any evidence on this cost hearing to deal with any of the above issues.

THE LAW

[28] Rule 57(1) of the Rules of Civil Procedure provides as follows:

(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;

(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 lawyer; and

(i) any other matter relevant to the question of costs.

[29] The purpose of cost awards were described by Paul M. Perell and John W. Morden in The Law of Civil Procedure in Ontario, 1st ed. (Markham: LexisNexis Canada Inc., 2010) at 653:

The role of cost has grown from its historic role of indemnification for the cost of litigation. Modern costs rules are designed to advance five purposes in the administration of justice:

(1) to indemnify successful litigants for the costs of litigation, although not necessarily completely;

(2) to facilitate access to justice, including access for impecunious litigants;

(3) to discourage frivolous claims and defences;

(4) to discourage and sanction inappropriate behaviour by litigants in their conduct of the proceedings; and

(5) to encourage settlements.

The availability of costs awards produces two countervailing forces that influence access to justice. Costs act as both an incentive and a disincentive to litigation. The prospect of receiving an award of costs encourages access to the justice system because a litigant recovers some of his or her legal expenses. However, the prospect of having to pay an award of costs, as well as one's own legal expenses, for an unsuccessful claim or defence acts as a deterrent to brining or defending a proceeding.

The exposure to costs awards discourages inappropriate behaviour because the court uses costs as a tool to protect the integrity of its process and to regulate the behaviour of litigants and their legal representative before the court.

The exposure to a costs award encourages settlements because a party is confronted with the reality that the expense of litigation includes not only paying one's own legal expenses but possibly paying a part of the opponent's legal expenses.

[30] There were no Offers to Settle relevant to this decision.

[31] The general rule is that costs follow the event on a partial indemnity basis. See Bell Canada v. Olympia & York Developments Ltd. (1994), 1994 CanLII 239 (ON CA), 17 O.R. (3d) 135 (C.A.).

[32] In order to determine entitlement and quantum of costs the court must consider the factors set out in R. 57 and all additional relevant factors.

THE ISSUES

[33] There are several significant factors which arise in this matter:

I. Is SPIRG a public interest litigant in this proceeding?

II. Was there mixed success and, if so, what effect should this have on costs?

III. Should Lystek be awarded separate costs? and

IV. Considering all the relevant factors, what is a reasonable amount of costs to award?

I. Is SPIRG is a Public Interest Litigant?

[34] SPIRG claims it is a public interest litigant.

[35] If a party is a public interest litigant, it is a relevant and important factor which the courts consider in determining whether to award costs or the amount of costs awarded. It is only one of the factors to be considered. I agree with the conclusion of Justice Lauwers in Durham Citizens, ante at para. 71:

I conclude that there is no rule or practice that a public interest litigant should be exempt from the ordinary costs rules including an order for security for costs. While there is discretion in the court to exempt a public interest litigant, each case must be considered on its own merits.

[36] The Supreme Court in the Supreme Court observed in Little Sisters Book & Art Emporium v. Canada (Commissioner of Customs & Revenue Agency), 2007 SCC 2, [2007] 1 S.C.R. 38 (S.C.C.) at paras. 34, 35:

Okanagan did not establish the access to justice rationale as the paramount consideration in awarding costs. Concerns about access to justice must be considered with and weighed against other important factors. Bringing an issue of public importance to the courts will not automatically entitle a litigant to preferential treatment with respect to costs: Odhavji Estate v. Woodhouse, [2003] 3 S.C.R. 263, 2003 SCC 69; Office and Professional Employees’ International Union, Local 378 v. British Columbia (Hydro and Power Authority), [2005] B.C.J. No. 9 (QL), 2005 BCSC 8; MacDonald v. University of British Columbia, (2004), 26 B.C.L.R. (4th) 190, 2004 BCSC 412. By the same token, however, a losing party that raises a serious legal issue of public importance will not necessarily bear the other party’s costs: see, e.g., Canadian Foundation for Children, Youth and the Law v. Canada(Attorney General), [2004] 1 S.C.R. 76, 2004 SCC 4, at para. 69; Valhalla Wilderness Society v. British Columbia (Ministry of Forests) (1997), 1997 CanLII 2099 (BC SC), 4 Admin. L.R. (3d) 120 (B.C.S.C.). Each case must be considered on its merits, and the consequences of an award for each party must be weighed seriously: see Sierra Club of Western Canada v. British Columbia (Chief Forester) (1994), 1994 CanLII 6510 (BC SC), 117 D.L.R. (4th) 395 (B.C.S.C.), at pp. 406-7, aff’d (1995), 1995 CanLII 1448 (BC CA), 126 D.L.R. (4th) 437 (B.C.C.A.). (Emphasis added)

[37] The first issue to be determined is whether SPIRG, on the evidence before me, is a public interest litigant.

[38] As SPIRG claims to be a "public interest litigant", the onus rests with SPIRG, to demonstrate, on the balance of probabilities, it is a public interest litigant.

[39] The factors for determining whether a party is a "public interest litigant" was set out by Justice Lauwers in Durham Citizens Lobby for Environmental Awareness and Responsibility inc. v. Durham (Regional Municipality), 2011 ONSC 7143 at para. 51:

The criteria for evaluating whether an entity is a public interest litigant were discussed by Perell J. in Incredible Electronics Inc. v. Canada (Attorney General) (2006), 2006 CanLII 17939 (ON SC), 80 O.R. (3d) 723 (Ont. S.C.J.) at para. 71, 91, per Perell J., and by Greer J. in Citizens for Riverdale Hospital v Bridgepoint Health Services, unreported May 28, 2007. They adapt and extend the criteria proposed by the Ontario Law Reform Commission in its Report on Standing, (Toronto: Minister of the Attorney General, 1989):

(a) the proceeding involves issues the importance of which extends beyond the immediate interests of the parties involved;

(b) the litigant has no personal, proprietary or pecuniary interest in the outcome of the proceeding, or, if he or she has an interest, it clearly does not justify the proceeding economically;

(d) the defendant has a clearly superior capacity to bear the costs of the proceeding; and

(e) the litigant has not engaged in vexatious, frivolous or abusive conduct.

[40] Let me deal with each of the above-mentioned factors.

(a) Does the proceeding involve issues beyond the interest of the parties involved?

[41] SPIRG submits it raised important public interest issues regarding the interpretation and application of the Township’s zoning by-law. However, the application, as originally framed, was of limited general application. The application sought a rescission of the Building Permit based on whether a specific proposed project, on a specific property, in a specific zoning area. There is nothing to suggest the determination sought would have had any precedential value beyond a specific application to the Lystek Facility in the Township’s M1 Zoning By-law.

[42] SPIRG submits that this Court’s determination would be of value to other "Dry Industry" in the Township. I disagree. The determination of what is a "Dry Industry" is not made in a vacuum. It is made based on a specific project – in this case, the specifications and operations of the Lystek Facility.

[43] The fact SPIRG and its members believe they have raised a public interest issue does not make it so. This was clearly stated by Justice Smith in Sierra Club of Western Canada v. British Columbia (Chief Forester), 1994 CanLII 6510 (BC SC), [1994] B.C.J. No. 1713, 117 D.L.R. (4th) 395 (B.C. S.C.), aff'd (1995), 1995 CanLII 1448 (BC CA), 126 D.L.R. (4th) 437 (B.C. C.A.) at para 49:

I do not think it would be wise to establish a principle that any person bringing a proceeding out of a bona fide concern to vindicate his or her perception of the public interest should be insulated from an award of costs in all cases. Such a motive will always be a relevant and important factor, but it should not be considered to the exclusion of all other relevant and important factors. The Court must retain the flexibility to do justice in each case.

[44] The situation is slightly different with respect to the application of s. 22.2(a) of the M1 Zoning By-law. This has a broader application to all permitted uses within the M1 Zoning By-law and to other Zoning By-laws which contain the same provision as s.22.2 (a). However, this was not the issue initially sought to be determined by SPIRG. SPIRG only chose to bring this issue forward after it came to counsel’s attention and it advanced SPIRG’s goal – to prevent the Lystek Facility from being completed and operational. The fact this was SPIRG’s goal was evident from SPIRG’s announcement it would appeal the CBO’s decision if he granted a building permit, even before the CBO had made a decision or announced his reasons for his decision. However, I also find that to a limited extent, this Court’s decision on this issue may impact on future building permits in the Township where a provision similar to s. 22.2(a) of the M1 Zoning By-law is found.

(b) Does SPIRG have a personal, proprietary or pecuniary interest in the outcome of the proceeding?

[45] The difficulty is there is no evidence about SPIRG or its members. There is no evidence as to why SPIRG or its members have brought this application.

[46] Where a private interest is the catalyst for the proceeding, the party will generally not be found to be a public interest litigant. In St. James’ Preservation Society v. City of Toronto et al.(2006), 2006 CanLII 22806 (ON SC), 272 D.L.R. (4th) 149, Justice Ducharme said the following at para. 19:

What is most significant here is that the presence of such a private interest without more will, in the majority of cases, be sufficient to disentitle the litigant to claim public interest status, even when the matter, "involve(s) public authorities and raise(s) issues of public interest."

[47] Where the party pursues a purely local concern, as opposed to a broader public interest, the party will generally not be found to be a public interest litigant. See Residents & Ratepayers of Central Saanich Society v. Central Saanich (District) (2011), 2011 BCCA 340, [2011] B.C.J. No. 1529 (B.C. C.A. [In Chambers]) at para. 29.

[48] The reason is simple, where the party’s interest in the proceeding is a personal one – it is not a party bringing forward an issue for the public good. The proceeding is not brought due to unselfish motivation by the party.

[49] Again, it is difficult to adequately consider this factor when there is no evidence regarding SPIRG or its members. If the SPIRG members are residents in the immediate vicinity of the Lystek Facility, perhaps their sole concern was their objection to such a facility near their homes, in which case SPIRG and its members would be concerned with local or personal issues in this proceeding. It is simply not possible to say with any degree of certainty.

(c) Have the issues been previously determined against the same party?

[50] No.

(d) Does the Township and Lystek have a clearly superior capacity to bear the costs and should they bear the costs?

[51] In all likelihood, the respondents have a superior capacity to bear costs. However, what is the consequences to Lystek and the Township should no costs be awarded against SPIRG.

[52] Lystek is a commercial facility but its corporate size or profitability is not known.

[53] The Township is composed of some 7,000 residents. Clearly, the residents of the Township can bear the costs without recovery from SPIRG.

[54] However, the issue is whether the residents should have to bear their own legal costs simply because some unknown number of residents or neighbouring land owner’s brought an unsuccessful application forcing the Township to expend legal funds?

[55] Unlike many of the cases, where the successful party was a large corporation, here the successful party is essentially the residents of the Township as a whole. The residents of the Township who will already have to bear a portion of the legal costs since only partial indemnity costs are at issue. Without a cost award against SPIRG, the residents of the Township will no doubt have to pay even more.

[56] I disagree with SPIRG’s submission that because the Township and the CBO are government parties favours a no costs order. There is no such principle. No authority was cited for this principal. In this case, the Township’s ability to bear the costs is entirely offset by the fact it would force the residents of the Township to bear the costs occasioned by the unsuccessful members of SPIRG.

(e) Has the defendant engaged in vexatious, frivolous or abusive conduct?

[57] No.

CONCLUSION

[58] Having considered all of the above factors, I am not persuaded, on the record before me, that SPIRG was a public interest litigant in this proceeding because it has failed to establish that the issues advanced by it in this application were predominantly public interest issues and failed to establish that the issues were not predominantly local issues to SPIRG or its members.

II. Was there mixed success and, if so, what effect should this have on costs?

[59] The issue of standing was resolved in SPIRG’s favour and against Lystek.

[60] The issue of mandatory compliance with s. 22.2(a) of the M1 Zoning By-law was resolved in SPIRG’s favour.

[61] As stated above, the issues of whether the Lystek Facility constitutes a Dry Industry and the remedy to be imposed for immediate non-compliance with s. 22.2 (a) of the M1 Zoning By-law were resolved in the Township’s and Lystek’s favour.

[62] In terms of time, the issue of standing was fairly brief. It occupied a very short time in argument.

[63] The largest amount of time on the application was spent on whether the Lystek Facility was a Dry Industry. Additional significant time was spent on the issue of s. 22.2(a) of the M1 Zoning By-law.

[64] Little time was spent in argument on the appropriate remedy.

III. Should Lystek be awarded separate costs?

[65] SPIRG commenced the application against the Township. The Township, given the history, the agreements with Lystek and the CBO’s decision, was bound to defend the application.

[66] Lystek chose to retain counsel to protect its interests rather than to rely on the Township’s representation.

[67] Lystek was unsuccessful in the sole new issue it raised.

[68] As for other issues, the Township and Lystek’s positions were identical. Lystek’s interests were already adequately represented by the Township.

[69] While the Township and Lystek’s counsel did their utmost to avoid duplication in the submissions, no doubt there was considerable duplication in time and effort. This can be demonstrated simply by a review of their respective factums filed in this proceeding.

[70] In my view, given that Lystek chose to participate in the proceeding as a party despite the fact its interests were aligned with the Township and its interests were already adequately protected and that Lystek was unsuccessful on the one distinct issue it raised, I exercise my discretion not to award costs in favour of Lystek.

IV. Considering all the relevant factors, should the Township receive costs and what is a reasonable amount of costs to award?

[71] There is no reason to deprive the Township of its partial indemnity costs. The only issue is whether those costs should be reduced due to the divided success and because some portion involves a public interest issue. I am satisfied that the Township should recover a reduced amount of costs because of these factors.

[72] The overarching requirement is that costs awarded be fair and reasonable in relation to the factors set out in rule 57.01 (1), of the Rules of Civil Procedure, exercised in light of the specific facts and circumstances of the proceeding. See Zesta Engineering Ltd. v. Cloutier, 2002 CanLII 25577 (ON CA), [2002] O.J. No. 4495 at para. 4 (C.A.)

[73] The reasonable expectation of the unsuccessful party is one of the factors to be considered in determining the amount that is fair and reasonable. Another factor is that the court should seek to avoid inconsistency with comparable awards in other cases.

[74] This was a complex matter, requiring counsel with expertise in municipal and planning. The Township’s counsel was called to the bar in 1991 and specializes in this area.

[75] Further, there was considerable relevant history and the factual issues in this proceeding required a detailed knowledge of the Lystek Facility and application to the Township’s zoning by-laws.

[76] The case was of importance to the Township given that it had sold the land to Lystek, the Township’s representation that Lystek’s facility was a permitted use, construction was ongoing and effected the Township’s new industrial development plans.

[77] SPIRG raised no issue with respect to the quantum claimed in the Township’s Cost Outline (except one which was adequately responded to at the hearing).

[78] I am persuaded that a fair and reasonable amount is to order that SPIRG pay to the Township the sum of $39,185.34 being its partial indemnity costs to July 19, 2012. Costs are payable forthwith. This takes into account the unexpected manner in which the s. 22.2(a) of the M1 Zoning By-law issue arose, the limited public interest associated with the s.22.2(a) issue and the divided success on the issues.

[79] Nothing in this endorsement reduces or eliminates the cost order made by Justice Conlan on April 26, 2012 that SPIRG pay to each of the Township and Lystek the sum of $1,000.

CONCLUSION

[80] SPIRG shall pay partial indemnity costs to the Township in the amount of $40,185.34 forthwith (inclusive of Justice Conlan’s order).

[81] SPIRG shall pay costs to Lystek in the amount of $1,000 forthwith (inclusive of Justice Conlan’s order).

Ricchetti J.

Released: December 7, 2012

COURT FILE NO.: 12/040 (Owen Sound)

DATE: 2012-12-07

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Southgate Public Interest Research Group

Applicant

– and –

The Corporation of the Township of Southgate, Lystek International Inc. and Douglas Kopp, Chief Building Official

Respondents

ENDORSEMENT ON COSTS

Ricchetti J.

Released: December 7, 2012

Southgate Public Interest Research Group v. The Corporation of the Township of Southgate et al., 2012 ONSC 6961

Case Summary

THE POSITION OF THE PARTIES

ADDITIONAL RELEVANT BACKGROUND

(i) Lystek’s motion to dismiss for lack of standing

(ii) The addition of Lystek as a responding party

(iii) The position of the parties prior to the July 19, 2012 hearing

(iv) The proceeding post July 19, 2012

(v) The position of the parties on the appropriate remedy

SPIRG

THE LAW

THE ISSUES

I. Is SPIRG is a Public Interest Litigant?

(a) Does the proceeding involve issues beyond the interest of the parties involved?

(b) Does SPIRG have a personal, proprietary or pecuniary interest in the outcome of the proceeding?

(c) Have the issues been previously determined against the same party?

(d) Does the Township and Lystek have a clearly superior capacity to bear the costs and should they bear the costs?

(e) Has the defendant engaged in vexatious, frivolous or abusive conduct?

CONCLUSION

II. Was there mixed success and, if so, what effect should this have on costs?

III. Should Lystek be awarded separate costs?

IV. Considering all the relevant factors, should the Township receive costs and what is a reasonable amount of costs to award?

CONCLUSION

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Statutory Provisions 1

Legal Tests 1