COURT FILE NO.: CV-13-472202
DATE: 2013/06/18
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Katherine Anne Hartley
Applicant
- and -
Hilary Cunningham and Stephen Scharper
Respondents
BEFORE: Moore J.
COUNSEL: John A. Howlett, for the Applicant
Clayton C. Ruby and Nader R. Hasan, for the Respondents
E N D O R S E M E N T
[1] At issue now is the matter of costs awarded to the respondents. In May of this year, I released an endorsement dismissing the application and awarding costs to the respondents in amounts to be agreed upon or fixed by me. The parties did not resolve costs and, therefore, through submissions in writing following the exchange of costs demands as directed, they seek my determination of the appropriate scale of costs to apply and the quantum of costs to be fixed.
[2] In order of their stated preference, the respondents ask that costs be awarded on a full indemnity basis, on a substantial indemnity basis, or on a partial indemnity basis. They assert that while partial indemnity is the norm where costs follow the cause, the court retains a wide discretion to grant a full indemnity or a substantial indemnity award where a party behaved in an abusive manner, brought proceedings wholly devoid of merit and unnecessarily run up the costs of the litigation.
[3] The respondents cite and rely upon cases[^1] in support of these propositions and insist that this case is as similar in its relevant facts as to bring it within the ambit of the cited cases. The respondents assert that this is an exceptional case, that the application was completely unnecessary, the applicant refused to negotiate, to mediate or to accept the respondents’ settlement offers and behaved in a high handed and intransigent manner throughout.
[4] The applicant accepts that both substantial and full indemnity costs are awarded in very rare and exceptional circumstances where there has been reprehensible, scandalous or outrageous conduct and submits that full indemnity costs require exceptional circumstances, such as baseless litigation, particularly where there has been a scurrilous attack on the administration of justice or where unsubstantiated allegations of dishonesty, illegality and conspiracy are advanced without merit.
[5] The applicant submits that this is not a proper case in which to award either substantial indemnity or full indemnity costs as none of the underlying factors relied upon by courts in exercising jurisdiction to award such enhanced levels of costs exist in this matter. The applicant insists that neither she nor her lawyer have done anything wrong or improper.
[6] The applicant submits that she did not reject a settlement proposal for the very relief sought in the application as asserted by the respondents. She points out that the one settlement proposal for the removal of the tree was conditional upon a full and final release and also required the applicant to bear all of the costs, expenses and consequences arising from the respondents’ conduct over a five-month period.
[7] The applicant offered in November of 2012 to remove the tree at issue in this application and the respondents countered by agreeing to abandon their claim to co-ownership of the tree to permit its removal but before the applicant could arrange for her arborist to remove the tree, the respondents resiled from their agreement to permit its removal and indicated their wish to have a court determine the issue of ownership of the tree; as such, the applicant insists that this application was a necessary process to determine ownership rights and the future fate of the tree.
[8] So, in essence, the parties agree with the legal principles applicable to the awarding of enhanced levels of costs. I agree with them. They disagree, however, on whether this case is one of those rare cases that warrants the application of such principles. In my view, it very clearly is not.
[9] A review of some of the cases in which enhanced levels of costs will put this case into proper perspective. In Baryluk[^2], Hackland J. stated that he had allowed the defendant’s motions and ordered the amended statement of claim be struck without leave to amend and dismissed the action on the basis that it sought to re-litigate issues decided in another proceeding and therefore constituted an abuse of process. He went on to find that the action was a scurrilous attack on the administration of justice.[^3]
[10] Hackland J. further stated:
I am of the opinion that this is one of the rare cases in which costs should be awarded on a full indemnity basis. As noted, I found that this action constituted a scurrilous attack on the administration of justice. The conduct of the defendants, judges of this court, was characterized by the plaintiff as case-fixing, abuse of public office, dishonesty and deceit in circumstances where there was no basis on the facts pleaded or submissions made to the court to support such outrageous allegations. Reckless attacks on the integrity of judicial officers must be recognized as conduct requiring chastisement and deterrence.
There is ample authority for an award of full indemnity costs where unsubstantiated allegations of dishonesty, illegality and conspiracy are advanced without merit. While full indemnity and substantial indemnity costs are an exception to the general rule and awarded only under special circumstances, allegations made or conduct by a party that is "reprehensible, scandalous, or outrageous" falls within the ambit of an award of full indemnity costs.[^4]
[11] This case is clearly not that case. There has been no suggestion, let alone proof of conduct so unbecoming of the litigants before the court on this application that supports an award of enhanced costs as described in Baryluk.
[12] In Standard Life[^5], Molloy J. decided a motion seeking an order dismissing a third party claim; she found that the claim failed to disclose a cause of action and was an abuse of process as it had been brought solely for procedural advantage. She observed that:
Costs on a partial indemnity basis are the norm and are awarded on that scale in the vast majority of cases. The situations in which costs on a substantial indemnity basis are appropriate are rare. However, one of the situations in which such an award is appropriate is where one party to the litigation has behaved in an abusive manner, brought proceedings wholly devoid of merit and unnecessarily run up the costs of the litigation.[^6]
[13] Molloy J. then concluded that:
As a result of the third party proceeding alone, Standard Life will have incurred nearly $40,000 in legal fees. This kind of tactical litigation is not conducive to the legitimate settlement of disputes in our judicial system. On the contrary, it is exactly the kind of conduct that makes litigation so prohibitively expensive that legitimate disputes cannot be litigated. It is appropriate in this kind of situation to discourage such conduct by imposing stiff costs consequences.[^7]
[14] Wholly unlike the situation in Standard Life, the parties to this application have not behaved in an abusive manner. The fact that they failed to resolve issues in advance of the application hearing is unfortunate but no basis for an award of enhanced costs. The application involved a first interpretation of a relatively new piece of legislation; it was certainly not a proceeding wholly devoid of merit. There is no basis upon which to conclude that any party unnecessarily ran up the cost of this litigation.
[15] In Envoy Relocation Services[^8], Annis J. stated that both substantial and full indemnity costs scales are awarded only in extraordinary circumstances. Moreover, both scales of elevated costs share the same constituent elements in the sense that full indemnity costs can be awarded only if the circumstances warrant an order for substantial indemnity costs. He went on to review and rely upon the decision of Epstein J.A. on behalf of the Ontario Court of Appeal in Clarington (Municipality) v. Blue Circle Canada Inc., 2009 ONCA 722 (C.A.), which recently spelled out the grounds upon which costs on a substantial indemnity basis would be awarded, stating as follows:
In Young v. Young, 1993 34 (SCC), [1993] 4 S.C.R. 3, at p. 134, McLachlin J., described the circumstances when elevated costs are warranted as "only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties."
The same principle was expanded upon in Mortimer v. Cameron (1994), 1994 10998 (ON CA), 17 O.R. (3d) 1 (C.A.), at p.23, where Robins J.A., speaking for the court, set out the restricted circumstances in which a higher costs scale is appropriate with reference to Orkin at para. 219.
An award of costs on the solicitor-and-client [now renamed to substantial indemnity costs] should not be awarded unless there is some form of reprehensible conduct, either in the circumstances giving rise to the cause of action, or in the proceedings, which makes such costs desirable as a form of chastisement.
[16] Having reviewed the legal matrix applicable to the matter before him, Annis J. went on to find misconduct pertaining to a contract worth half-a-billion dollars affecting the relocation of government personnel for five years with the consequence that the misconduct reshaped the relocation industry in Canada.[^9] The enormity of the conduct in that case was detailed and exceptional. There is nothing remotely similar in the applicant’s conduct in this matter calling for the application of principles supporting an award of enhanced costs in this matter.
[17] The parties agree that the factors set out in Rule 57 govern the determination of costs on a partial indemnity basis. I have reviewed and considered those factors and, where applicable, the parties submissions upon them.
[18] The applicant brought this application under rule 14 to determine ownership of a tree and to obtain a judicial interpretation of s. 10 of the Forestry Act, a section that had not been interpreted in this court. The determination sought was necessary in order to bring peace and harmony between neighbours and to determine the rights of each to direct the future for the subject tree.
[19] The matter was not particularly factually or legally complex but by reason of the tree’s safety, health and location issues involved, it required input from experts and cross examinations in preparation for the hearing.
[20] There were no offers exchanged that can give rise to considerations under rule 49.10. Offers were made on terms unacceptable to the receiving party but none can be considered as supporting an exercise of discretion to award enhanced costs.
[21] Counsel with carriage of the application at its hearing are both experienced over several decades in litigation matters; their civility, professionalism and preparedness produced an efficient and cost effective hearing.
[22] Counsel, having been instructed to exchange costs demands before the hearing began, were aware of the financial jeopardy that their clients faced. To some extent, that exchange may have informed the applicant of her reasonable expectations in the event she was called upon to pay costs. She has not, however, provided the court with particulars of such expectations, other than what I might glean from her submission that taking into consideration all of the factors and principles involved, the fair and reasonable disposition of costs in this case would be an amount of 50% or less of the amount claimed for partial indemnity costs. That bald submission is of no assistance, however.
[23] Whether because of or despite the fact that the court directed counsel to exchange costs demands at the hearing of this application, counsel chose to share with the court in their written submissions copies of their demands. As such, I note that the time spent on each side is approximately equal.
[24] It is trite to say that in fixing costs, a judge is not undertaking a line by line analysis of the bill of costs of the successful party. I accept and have no reason not to that the time spent as detailed in the respondents’ costs materials was both spent and warranted.
[25] It is also trite to say that fixing costs is not an arithmetic exercise of multiplying docketed time by hourly rates; this said however, I am content that the rates charged for time supporting the respondents’ claim for costs on a partial indemnity basis are reasonable.
[26] The overriding principle in fixing costs is reasonableness.[^10] So, after considering all relevant factors and having taken a step back to consider the amounts of fee and disbursement items to reflect a fair and reasonable costs award, I fix the fee items of the respondents’ costs, on a partial indemnity basis, at $10,000 plus applicable HST plus disbursements of $2,951.48 plus applicable HST.
Moore J.
DATE: June 18, 2013
[^1]: Baryluk (c.o.b. Wyrd Sisters) v. Campbell, 2009 O.J. No. 2772, Standard Life Assurance Co. v. Elliott (2007), 2007 18579 (ON SC), 86 O.R. (3d) 221 and Envoy Relocation Services Inc. v. Canada (Attorney General), 2013 ONSC 2622, [2013] O.J. No. 1999.
[^2]: Supra, at para 1
[^3]: Ibib, at para 4
[^4]: Ibid, at paras 9 & 10.
[^5]: Supra, at paras 2 & 3
[^6]: Ibid, at para 9
[^7]: Ibid, at para 15
[^8]: Supra, at paras 58 to 60.
[^9]: Ibid, at para. 135
[^10]: Boucher v. Public Accountants Council for Ontario (2004), 2004 14579 (ON CA), 71 OR (3d) 291; 188 OAC 201, at paras. 37 & 38.