SUPERIOR COURT OF JUSTICE – ONTARIO

COURT FILE NO.: 842/12 (Perth)
DATE: 2014 Dec 22

RE: 2145850 ONTARIO LIMITED o/a Highland Bus Services,

BARR BUS LINES LIMITED, CLARK BUS & MARINA LIMITED,

HEALEY TRANSPORTATION LIMITED, PREMIER BUS LINES INC., VALLEY BUS LINES LIMITED, and WHITTEKER BUS LINES LIMITED

Plaintiffs

AND:

STUDENT TRANSPORTATION OF EASTERN ONTARIO (STEO)

Defendants

AND:

HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO

Intervenor

BEFORE: Honourable Mr. Justice Douglas M. Belch

COUNSEL: J. Lisus, D. Schwartz and M. Law, for the Plaintiffs/Moving Party

R. Keel, P. Harper and N. Simmons, for the Defendant

R. Carr, C. Thompson and N. Laeeque, for the Intervenor

COSTS ENDORSEMENT

[1] On July 11, 2014, I released my decision following a motion heard June 24 and June 25, 2014. The motion involved various student bus lines, (plaintiffs), the Student Transportation of Eastern Ontario (defendant) and her Majesty the Queen in Right of Ontario (Intervenor, Ministry, Crown).

[2] There were three issues on the motion; success was divided. All three parties claim costs; the plaintiffs, $196,334; the defendant, $93,326.22; and the Crown, $61,950.

[3] For the reasons that follow costs are awarded and fixed at $150,000 for the Plaintiffs, payable by the Crown; $61,950 for the Crown payable by the Plaintiffs and the costs related to the funding of STEO is left to either the trial judge or the court conducting a judicial review.

OVERVIEW

[4] On the motion, the plaintiffs requested an Order granting leave to amend the Amended Statement of Claim. Those amendments were both financial and non-financial in nature and included adding the Crown as a party defendant. The plaintiffs sought an Order requiring the Crown pay the plaintiffs’ costs to date plus costs going forward. In addition an Order declaring the Crown’s decision to fund STEO’s costs, ultra vires, prohibiting continuing payments, and requiring STEO to repay the Crown the costs already received.

[5] STEO took no position with the plea to amend but submitted the funding issues should be addressed at trial. It took no position with the Plaintiffs ’request to be indemnified for costs but objected to any declaration their own funding was ultra vires and opposed the issue of prohibition of future payments and the need to repay.

[6] The Ministry objected to the amendments and the Plaintiffs ’request to add the Ministry as a party Defendant.

[7] It must be appreciated this overview is extremely brief given the materials filed on the motion exceeded 4000 pages.

THE MOTION RESULT

[8] The Plaintiffs ’request for amendments which were not financial and to add the Ministry as a party Defendant was granted. Their request to have the Ministry pay their costs to date and going forward was denied. Their request declaring STEO funding ultra vires, prohibiting continuing payments, and requiring repayment was adjourned to the trial judge. The Plaintiffs were also permitted to amend their claim to include judicial review of STEO funding and both STEO and the Ministry were permitted to file responding materials.

[9] With respect to costs the Court wrote… “The costs of the motion are left to counsel for the parties to sort out. Failing that, the Court will fix costs, provided written submissions, limited to five pages each are received by the Court… The Court leaves the parties with these observations which may assist their agreement on costs. The plaintiffs have been successful on amendments, not financial in nature, and also having the Ministry added as a party defendant. STEO did not contest either of those issues. The plaintiffs have not been successful on their request for funding from the Ministry. Again, STEO took no position on this issue. The issue of STEO funding has been reserved to the trial judge.”

THE PLAINTIFFS’ POSITION

[10] The Plaintiffs ask the Crown pay costs for those parts of the motion relating to the amendments and adding the Crown as a defendant and that no costs be payable with respect to the request for funding because the Crown deliberately withheld from discovery a large number of relevant documents which only came to light as a result of the motion. The Plaintiffs ask for costs of STEO’s funding issue be in the cause, as determination of this issue was deferred to trial.

[11] The Plaintiffs submit the Crown resisted all of the amendments on the basis they were untenable despite the same arguments having been raised and rejected by judges on earlier motions and in face of clear appellate direction regarding the mandatory nature of amendments and despite the very high Rule 21 bar. If the Crown had limited its objection to the funding issues, the motion would have required significantly less time and expense. In addition, the Plaintiffs’ funding motion led to production of critical documents the Crown failed to produce, particularly, about the Crown’s conduct in directing Requests for Proposals, (RFPs). Failure to produce those documents caused significant delay and expense including discovery on an incomplete record. Refusals to admit and conduct that unnecessarily lengthens the duration of a proceeding are Rule 57.07(1) considerations when costs are fixed.

[12] The amendments were of profound importance to these bus operators and the larger issues they raise. They create a test case which will determine multiple proceedings in a cost- effective way and a costs award is imperative to the prosecution of this case to ensure the issues are fully and fairly adjudicated submit the Plaintiffs.

[13] Regarding the funding of STEO, where an issue is deferred to trial, costs are determined in the cause. Further, STEO is not entitled to any costs as it has not incurred any; costs provide indemnification and STEO is operating under a blanket indemnity from the Crown.

[14] The partial indemnity rates in the Plaintiffs ’costs outline are equal to 60% of the actual rates charged by counsel to the Plaintiffs. Counsel for the Plaintiffs submit the claim for $196,334 is in line with costs fixed in other unrelated actions as well as with earlier proceedings in this action and closely related actions involving school bus operators. This court should not second-guess successful counsel on the amount of time spent on a motion. Counsel respectfully submit the Plaintiffs’ hours and rates are reasonable given the importance and complexity of the motion.

POSITION OF STEO

[15] STEO advises that if the motion had proceeded in its February 24, 2014 form, STEO would only have participated in a limited way and would not have taken a position with adding the Crown as a defendant or with respect to the fresh as Amended Statement of Claim. However, it was served with a further Amended Notice of Motion dated May 15, 2014 in which the plaintiffs sought a declaration the Crown’s funding of STEO was ultra vires and requiring repayment to the Crown. When the Plaintiffs requested funding be addressed on the motion rather than at trial, STEO felt compelled to participate in a more extensive way. Because the Plaintiffs were unsuccessful in obtaining relief with respect to STEO funding, it seeks its costs on a partial indemnity basis in the amount of $93,326.22.

[16] Further, STEO submits that as a result of the inconsistencies as between the Plaintiffs’ further amended notice of motion and their factum, it was difficult to know exactly what relief was being sought by the Plaintiffs on the motion and accordingly, it was required to address all forms of relief sought by the Plaintiffs. Also, due to the extent to which the Plaintiffs characterize allegations as facts, it was required to present a detailed reframing of the factual context in its factum including addressing whether its RFP was” lawful,” and whether the Ministry was actually formulating and directing STEO’s litigation strategy. All this meant an increase in the time spent preparing its factum.

[17] STEO submits it was successful on what it had stated from the beginning, namely, the vires of funding required Judicial Review, yet the Plaintiffs had not sought Judicial Review. In addition, the Plaintiffs did not reply to the arguments specifically provided in STEO’s comprehensive legal position on funding issues. On the motion, the Plaintiffs spent limited time on the vires of the funding and no time on submissions pertaining to the repayment of funds by STEO.

[18] STEO submits for the Plaintiffs to make such an amendment and then to fail to plead or prove the court had jurisdiction, to fail to address any of the arguments of STEO in its reply factum, to give minimal attention to the funding issues on the hearing of the motion including whether or not the relief sought was in fact available, warrants a costs award in favour of STEO. Those costs should be payable now, or in the alternative, fixed now and payable on the conclusion of the action.

[19] There is no basis for the Plaintiffs to assert the funding agreement between STEO and the Ministry leads to a conclusion no costs have been incurred and thus, the Plaintiffs are not responsible for the same. Had the Plaintiffs left funding for trial or judicial review, there would have been little need for STEO to incur costs on the motion.

[20] STEO submits, “the Plaintiffs should be responsible for cost consequences that flow in the ordinary course when a moving party brings an unsuccessful motion, regardless of who is paying the legal costs. In taking the position that STEO has incurred no costs, the Plaintiffs are actually seeking to have the public purse pay for the cost of their unsuccessful motion.”

[21] STEO argues it does not always follow where an issue is deferred or partially deferred to trial that costs are payable in the cause as the Plaintiffs submit. The case relied on by the plaintiffs, Mittal v. Jindal, [2012] O.J. No. 3551 stands for the proposition costs may be payable in the cause, but the case does not stand for the proposition this is always so.

SUBMISSIONS OF THE CROWN

[22] The Crown submits it had substantial success on two of the three motions and the Plaintiffs enjoyed partial success on the amendments motion. The Plaintiffs’ request for funding should be dismissed. The validity of some of the amendments remain to be determined at trial. The Crown submits it is entitled to costs from the Plaintiffs in the amount of $61,950 on the issue of the Plaintiffs’ funding, payable now, and costs of the amendments motion to be costs in the cause.

[23] The Crown characterizes the motion differently than the Plaintiffs. It disagrees the amendments portion of the motion consumed the majority of the time and suggests the Plaintiffs’ own material focused mainly on the funding issues and the parties spent the majority of oral argument on the funding issues. The Plaintiffs’ request for funding was difficult and complex and precipitated additional steps in the proceedings. Further, the Plaintiffs’ allegation the Crown deliberately withheld relevant documents and ought to be disentitled to costs of the funding motion is unsupported by any evidence. Also, the Plaintiffs’ request for costs in the amount of $196,334 on an amendments motion, is excessive and unreasonable and remind the court of its duty to award fair and reasonable costs for the unsuccessful party to pay rather than actual costs incurred by the successful litigant.

[24] The Crown submits the 4000 pages delivered by the Plaintiffs were of little assistance to the determination of the legal issue. “Much of the material was provided as colour and background to the motions and consisted of records in prior proceedings, discoveries and productions.” The Crown contends its written interrogatories and Response Record constituted the most useful materials in the determination of the funding motion. The Plaintiffs’ suggestion that but for the Plaintiffs’ funding motion, the fact the Ministry was funding STEO’s defence would not have been discovered is unfounded as in their own notice of motion the Plaintiffs stated the documentation which demonstrated the funding was obtained by way of a Freedom of Information (FOI) request. Also, the funding of the STEO defence did not demonstrate the Crown controlled the litigation for STEO.

[25] The Crown argues “if the amount of hours in the cost outline submitted by the Plaintiffs is accurate, the time spent by counsel preparing for the amendments motion totals 500 hours involving both senior counsel and associates. Respectfully, it is not reasonable to expect counsel to spend 500 hours for a one day amendments motion... . As the successful party, the Crown is entitled to its reasonable costs in responding to the funding issues. The Plaintiffs’ request for a funding Order was difficult and complex and would have had serious implications for the Attorney General if successful. The Crown submits that $61,950 is entirely reasonable in responding to a complex record for public funding….”

REPLY OF THE PLAINTIFFS RESPECTING STEO

[26] The Plaintiffs reply “STEO was not successful on the motion. The court rejected STEO’s request to dismiss the Plaintiffs request for declarations regarding the legality of the funding and whether STEO should be required to repay that funding. Had STEO been successful, the Plaintiffs would not have been able to raise these issues at trial. Instead, the court left those issues to be determined by the trial judge. STEO says it would have been content for these matters to be addressed at trial, but this position was not raised at any point prior to the motion, nor in its factum, and was not the relief requested by STEO…. The appropriate Order is therefore that costs be in the cause to be determined by the trial judge.”

[27] Only 12 pages of STEO’s 52 page factum addressed STEO’s funding issues; the balance addressed the legality of RFPs, not an issue on the motion, and factual clarifications which were irrelevant to the funding issues.

[28] STEO seeks costs for over 310 hours of work on two narrow issues far from the focus of the motion and which it spent less than an hour addressing at the hearing. By comparison, the Crown spent 187 hours on funding for the Plaintiffs.

PLAINTIFFS’ REPLY TO THE CROWN’S SUBMISSIONS

[29] The Plaintiffs note the Crown argues the Plaintiffs should not receive any costs because the validity of the amendments remains to be determined. However, the issue was not whether the claims would succeed at trial, but whether they passed the Rule 21 test.

[30] A large record was required to bring the Court up to speed on a long complex history.

[31] The Crown had withheld relevant documents for more than a year and they were only disclosed on this motion. It was not a “lucky strike in a freedom of information request.” Those documents were a small fraction of the documents eventually produced. The earlier intervention Order required disclosure yet the Crown had not disclosed. This causes the Plaintiffs to submit the “Crown should not be rewarded with costs that were occasioned by its own recalcitrance.”

[32] In addition, it appears Crown counsel did not delegate work to junior counsel and claims 30 hours for reviewing documents, most of which were Crown productions. As well, having raised numerous complex and novel legal issues that required extensive research in an attempt to strike the Plaintiffs’ claims, the Crown cannot now suggest the Plaintiffs should have taken a more restrained approach.

[33] Finally, the Plaintiffs add, “it is also notable that costs of the one day motion in the action against the STS consortium were settled at $135,000, after leave was granted to appeal a costs award of $190,000 because STS and the Crown withheld relevant documents from the Court…. It [Crown] therefore must have approved the $135,000 settlement.”

GENERAL PRINCIPLES

[34] There was basic agreement a successful party is entitled to costs on a partial indemnity basis. The overriding principle in awarding costs is to fix a fair and reasonable amount for the unsuccessful party to pay rather than an amount determined by the actual cost incurred by the successful litigant.

[35] Rule 57.01 provides a broad range of factors to be considered by a court in exercising its discretion in fixing appropriate costs. The parties mentioned other factors they considered important. The hourly rate charged by the successful litigant is relevant; the successful litigant is not to receive a windfall. The court must consider whether the time claimed is reasonable, the complexity of the proceedings and the importance of the issues to the parties. The court has taken all of these factors into consideration in arriving at its decision.

ARE THE HOURS AND HOURLY RATES REASONABLE?

[36] From the costs submissions, the court has compiled information about the counsel involved including the year of their call to the bar, the number of hours each expended, their hourly rates and in the case of the Plaintiffs and STEO, determined their hourly rates for partial indemnity equate to 60% of their actual rates consistent with past court decisions. There was no explanation about the Crown’s $350 an hour and whether this represents 60% of counsel’s actual rate. The information provided is shown in the following table:

PLAINTIFFS
STEO
CROWN

Counsel

J. Lisus
D. Schwartz
M. Law
Law clerk
R. Keel
N. Simmons
P. Harper
R. Carr

CALL

1992
2006
2011
N/A
1977
2006
2009
1973

of hrs

85.7
194.8
219.6
1.3
95.4
129.5
85.8
187

Hourly rate

495
325
245
175
252
252
252
350

% of actual bill

60%
60%
60%
60%
60%
60%

TOTAL

42,421
63,310
58,809
227.50
23,940
32,634
21,546

Total # of hours

501.4
310.7
187

CLAIM

$196,334 inclusive

$93,326 inclusive

$61,950 inclusive

[37] The above exercise revealed it was impossible to compare “apples to apples.” One example is the data from the Plaintiffs. The Plaintiffs have requested costs in the amount of $196,334 inclusive related to the amendments and adding the Crown as a party. They submit these aspects of the motion were the most time-consuming and the Crown resisted all amendments. They submit their hours and rates are reasonable and proportional and are in line with past jurisprudence. Further the amendments sought were of crucial importance. The Crown submits counsel for the plaintiffs expended too much time on the amendments.

[38] Unfortunately, the Plaintiffs’ Costs Outline and its description of services which accompanied their costs submissions does not allocate the 500 hours as between the funding issues and amendments and adding the Crown as a party. Comparing the hours submitted by STEO, 310.7 on one issue alone, and the Crown’s 187 on one issue, does not clarify an allocation of the 500 hours.

[39] The information from STEO deals only with the vires of STEO’s funding. The Crown provides its details related to the denial of funding to the Plaintiffs only, even though additional Crown counsel had been involved on the issues of adding the Crown as a party and other amendments. Failure to provide information about hours/hourly rates means the court does not have the benefit of what parties were charged by their own counsel and therefore, cannot draw upon that information to determine what an unsuccessful litigant would expect to pay.

ANALYSIS

[40] On the issue of hourly rates the average hourly rates were $328.60 for the Plaintiffs, $251.43 for STEO and $350 for Crown counsel which are not remarkable, given their call to the bar information.

[41] The Crown implies the Plaintiffs enjoyed success on what was a straight forward motion to add a party. The court is satisfied this was not the usual motion to add a party. Normally, adding a party is often consented to, particularly if there is no prejudice. A plaintiff is not required to tender evidence to support a claim. Here the Crown argued the bus operators were not owed a duty, there was no proximity or special relationship, no representations had been made, and the Plaintiffs had not claimed damages which are a pre-requisite for relief. The Crown argued immunity as provided by section 22 of the BPSAA, there was no basis for declaratory relief, and the remedies sought were untenable because they are asserted in respect of policy decisions of the Ministry.

[42] The motion to add a party appeared to be treated as a mini-trial by the Crown, whose strategy it seemed, was to keep the Plaintiffs from leaving the starting gate. It should have been concerned about the test for Rule 21 motions. The Plaintiffs not surprisingly felt compelled to address the points raised by the Crown. A considerable expenditure of time on preparation and presentation occurred. It added to the size of the motion record because material was required to deal with the points the Crown had raised in addition to providing the necessary history as to why the parties were in litigation

[43] The Plaintiffs were successful in their bid to have the Crown added as a party defendant and are entitled to their costs. STEO took no part in the dispute to have the Crown added as a party defendant. Without counting pages or keeping track of time when counsel addressed the Court, the Court is satisfied over one-half of the motion was spent addressing the amendments and adding the Crown as a party defendant. I fix costs in the amount of $150,000 payable forthwith by the Crown to the Plaintiffs. In exercising my discretion and reducing costs from $196,334, I discounted the number of hours but was mindful of the non-disclosure allegation; the need to respond to what are essentially trial issues and while not successful on funding, the issue was both complex and somewhat novel.

PLAINTIFFS’ FUNDING COSTS

[44] The Plaintiffs’ claim for funding was unsuccessful. STEO took no position on funding for the Plaintiffs. As grounds for their claim, the Plaintiffs argued the Crown’s funding of STEO’s legal costs skewed the litigation allowing the consortium to litigate with impunity against small operators. Funding would level the playing field and allow access to justice by mitigating the severe inequality between litigants and thus provide proportionality. The Plaintiffs submitted “here we have something quite unique… Small operators coming forward and raising an issue of public importance.”

[45] The Crown argued the Plaintiffs must explore all possible funding options including fundraising campaigns, loan applications, contingency fee agreements and any other available options. None of the plaintiff corporations claim to be impecunious nor are their principal shareholders. In fact, they have significant assets. There is no evidence they have attempted to borrow money. It submits this action is not public interest litigation, but rather, issues here are of significance to the Plaintiffs and other small rural operators. In addition, the Crown submits declaratory relief is not the proper subject of an interlocutory motion.

[46] The Court was satisfied this litigation was more in keeping with private economic interests. The Plaintiffs have honoured their obligations to pay legal costs to date. The Court was not convinced they were without means. The necessary evidentiary base had not been provided for funding by the Crown.

[47] The Crown was successful on the issue of funding for the Plaintiffs and are entitled to its costs which are fixed at $61,950 inclusive, as requested, payable by the Plaintiffs forthwith.

[48] Before leaving these costs, the Court repeats what it said in its reasons on the motion, namely, the Court was sympathetic to the plight of the small bus operators. The claim advanced for funding was novel and in keeping with the sentiments expressed by the Supreme Court in recent decisions concerning access to justice, however, the Court was satisfied this litigation is about private economic interests and the Plaintiffs had, at least to this point, paid the accounts received from their lawyers. Further, the Court was unable to determine exactly what documents had been “withheld for a year” by the Crown and what documents had been obtained by the “lucky strike” in the FOI application and exactly how the documents were related to the issues on this motion. The Court is concerned with the suggestion documents were withheld in face of a court Order for disclosure. If that proves to be the case, it might well be taken into account by the trial judge in his or her determination of the overall court costs finally payable.

STEO’S COSTS

[49] As mentioned earlier, STEO seeks costs of $93,326 inclusive from the Plaintiffs for having to defend the vires of its funding at the motion stage requiring STEO to take a much more active role on the motion then originally intended. The Plaintiffs resist, submitting the issue has been reserved to the trial judge and costs should be in the cause.

[50] I have some patience for the position of counsel for STEO. Those Counsel were unable to determine whether to wait to trial or a judicial review to present full argument and felt compelled to be prepared to deal with the issue at the motion. No one advised the court whether the Plaintiffs’ intentions could have been ascertained by a simple inquiry between counsel prior to the motion. As it turned out, the oral presentation by STEO was quite brief, but it had prepared a substantial presentation for the court’s consideration.

[51] At first glance, the court favoured the position of STEO, but would not have awarded $93,326, believing much of the work is usable at trial or judicial review. Next, the court considered awarding partial costs, with the balance left to the judge finally hearing the matter, however, that sets up the possibility that between the two courts, something would be considered or counted twice or completely missed altogether. It is the court’s decision to leave the matter of STEO’s costs to the trial judge or for consideration at the judicial review.

[52] While it is not necessary to comment, the court believes STEO is correct when it states just because the majority of its costs are covered by the Crown, there is no reason not to require the Plaintiffs to pay some costs for their role in creating the confusion about what relief was sought on the return of the motion.

Honourable Mr. Justice Douglas M. Belch

Released: December 22, 2014

COURT FILE NO.: 842/12 (Perth)
DATE: 2014 Dec 22

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

2145850 ONTARIO LIMITED o/a Highland Bus Services, BARR BUS LINES LIMITED, CLARK BUS & MARINA LIMITED, HEALEY TRANSPORTATION LIMITED, PREMIER BUS LINES INC., VALLEY BUS LINES LIMITED, and WHITTEKER BUS LINES LIMITED

Plaintiffs

– and –

STUDENT TRANSPORTATION OF EASTERN ONTARIO (STEO)

Defendant

– and –

HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO

Intervenor

costs endorsement

Belch J.

Released: December 22, 2014