The Corporation of the Municipality of South Bruce v. 1260964 Ontario Inc., 2015 ONSC 2206
v. 1260964 Ontario Inc., 2015 ONSC 2206
COURT FILE NO.: 86/13 (Walkerton)
DATE: 2015 04 08
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: THE CORPORATION OF THE MUNICIPALITY OF SOUTH BRUCE v. 1260964 ONTARIO INC.
BEFORE: EMERY J.
COUNSEL: Tammy W. Grove-McClement, for the Applicant
Flora Nabrotzky, Director/Officer for the Respondent
Flora Nabrotzky, in person
HEARD: March 5, 2015
REASONS FOR DECISION
[1] On March 5, 2015, I heard the motion of the applicant municipality for an order to find the respondent corporation 1260964 Ontario Inc. in contempt. The applicant municipality brought that motion because the respondent corporation took down it’s building at 9 Clinton Street South in Teeswater without a demolition permit, contrary to the order of Justice Thompson dated December 17, 2013.
[2] The motion also requested an order to enforce an amended order to comply, also known as the emergency order in this proceeding, issued by the applicant municipality on September 26, 2013. The emergency order was confirmed by Justice Thompson’s order to require the respondent corporation to remediate the lot at 9 Clinton Street South when the building was demolished.
[3] On March 10, 2015, I released an endorsement finding the respondent 1260964 Ontario Inc. in contempt of court, and granting orders permitting the applicant municipality to perform the work necessary to remediate the site after finding the Respondent 1260964 Ontario Inc. in breach of the emergency order, for reasons to follow. These are those reasons.
No Leave Obtained under Rule 15.02
[4] Prior to hearing the motion on March 5, 2015, the applicant made submissions that the respondent corporation had not complied with Rule 15.01(2). Rule 15.02 requires that a corporation in a proceeding must be represented by a lawyer unless the corporation obtains leave from the court. Ms. Flora Nabrotzky is the director and officer for the respondent corporation. Ms. Nabrotzky submitted that she understood from comments made by Justice Thompson on an earlier appearance on the application that His Honour had given approval for the respondent corporation to proceed without a lawyer.
[5] I wish to make it clear from the outset of these reasons that Ms. Nabrotzky has not been without legal advice throughout this proceeding. She informed the court that she has consulted with her sister, who is an Ontario lawyer now living in California.
[6] I dealt with the issue of the respondent corporation’s non-compliance with Rule 15.01(2) before hearing argument because my ruling could affect what evidence filed on behalf of the respondent corporation I would consider on the motion, and the possible scope of Ms. Nabrotzky’s submissions.
[7] Rule 15.01(2) provides as follows:
(2) A party to a proceeding that is a corporation shall be represented by a solicitor, except with leave of the court.
[8] I have considered Ms. Nabrotzky’s stated belief that the respondent corporation had been given express or implied approval by Justice Thompson to proceed without a lawyer. No motion was ever brought for leave, and no order granting leave was ever issued. If the respondent corporation intended to seek leave, it should have brought a motion on notice to the applicant municipality under Rule 15.02.
[9] I do not consider any comment made by another judge in this proceeding to have the force and effect of granting leave to the respondent 1260964 Ontario Inc. to defend the application or to respond to any subsequent step without a lawyer. If leave were granted, that leave would have been written in an endorsement or made in the form of an order. I had no such endorsement or order referred to me in argument. I say that leave must be given in the form of an endorsement or an order because the parties and the court require the certainty that an endorsement or a properly entered order provides. I also say it out of fairness to any judge to whom a comment is attributed in the course of a previous step so that his or her comments are not misconstrued or taken out of context.
[10] The applicant municipality cited the decision of Master Sandler in 419212 Ontario Ltd. v Astrochrome Crankshaft Toronto Ltd., et al, (1991) 1991 CanLII 7163 (ON SC), 3 O.R. (3d) 116 as authority for what factors the court should take into account if a motion for leave were brought under Rule 15.01(2). Those factors include the following:
The internal situation of the corporation;
Whether the person seeking to represent the corporation in the litigation process is a senior representative of the corporation duly authorized by the board of directors;
The nature of the action and the issues;
Whether it would be seriously unfair to the opposite party to have the case defended by a non-solicitor; and
Whether the proposed corporate representative will be able to properly carry out the duties of a litigant under the rules.
[11] The Court in 419212 Ontario Ltd. v Astrochrome Chrankshaft Toronto Ltd. concluded that if the corporate party who has not obtained leave is a respondent, its defence or response may be struck out. There is a distinction to be made between a corporation who is making a claim as a plaintiff or applicant, and where a corporation, as here, is responding to a claim. It would be unfair to hold up the applicant municipality’s motion because of the noncompliance of the respondent corporation with Rule 15.02. At the same time, the motion of the moving party may be impeded by the unrepresented corporation because the materials and submissions of that corporation are irrelevant or unfocused having regard to the nature of the case, or issues on the motion. I see the failure of the respondent corporation to either have legal representation or to seek leave to proceed without a lawyer as one of standing to file materials, or to make submissions before the court. I took the view that instead of striking the responding materials of the respondent corporation, the better approach would be to limit the evidence and argument of the respondent corporation except where required in the interest of justice.
[12] I did not see the benefit of giving the respondent corporation additional time to retain counsel. In any event, Ms. Nabrotzky made no submissions for an adjournment of the motion to give her corporation more time to seek retain legal representation or to bring a motion for leave.
[13] I note that the evidence shows that Ms. Nabrotzky is the sole officer and director of the corporation. The corporation was dissolved in 2006 under her watch. The respondent corporation was only revived on December 9, 2013 to defend the applicant municipality’s application to confirm the emergency order.
[14] Ms. Nabrotzky has filed several affidavits containing detailed evidence of questionable relevance that detracts from the main issues between the parties. A brief review of that affidavit material raised concerns in my mind about whether Ms. Nabrotzky is able to properly carry out the duties of the respondent corporation as a litigant.
[15] I therefore concluded that I would not consider the affidavit evidence filed by Ms. Nabrotzky on behalf of the respondent corporation when hearing the motion, or to allow her to make submissions on behalf of the respondent corporation. I made an exception in my ruling to allow Ms. Nabrotzky to make submissions on those affidavit materials relevant to her potential liability as the sole officer and director through Rule 60.11(6) for the contempt of the respondent corporation. I determined that Ms. Nabrotzky should have the right to make submissions in her personal capacity because of her possible exposure to those remedies listed in Rule 60.11 (5) for the contempt of the respondent corporation, including costs.
[16] The applicant municipality indicated on the motion it is seeking only costs from Ms. Nabrotzky for the contempt of the respondent corporation. Ms. Nabrotzky was therefore permitted to make submissions restricted to what findings could be made by the court for the contempt of the respondent corporation, and if there was a finding of contempt, how that finding should relate to her personal liability for those costs.
Finding of Contempt
[17] In paragraph [3]1. of my endorsement dated March 10, 2015, I granted an order finding the respondent 1260964 Ontario Inc. in contempt of Mr. Justice Thompson’s order dated December 17, 2013 for not complying with paragraph 11 of that order. Paragraph 11 of Justice Thompson’s order reads as follows:
- THIS COURT ORDERS that the respondent, 1260964 Ontario Inc. shall apply for a demolition permit for the Building and the Premises and shall meet all requirements of the Chief Building Official and any and all legislation and authorities with respect to the demolition of the Building.
[18] Contrary to Justice Thompson’s order, 1260964 Ontario Inc. hired Total Demolition Services Inc. to demolish the building over the weekend of May 3 and 4, 2014 without first obtaining a demolition permit. Mr. Kirk Livingston, the Chief Building Official for the applicant municipality deposed in an affidavit filed in support of the applicant’s motion that he believes the contractor was aware that there was no demolition permit for the demolition. He bases this belief on previous discussions he had with the contractor prior to the demolition. Mr. Livingston further deposes to his belief that neither the respondent corporation or its contractor contacted Westario Power to detect or disconnect any power lines, or to otherwise communicate with the power authority about safety issues relating to the demolition of the building.
[19] Mr. Livingston further deposes that the contractor carried out the demolition of the building on a weekend. Mr. Livingston does not generally work on weekends.
[20] Mr. Livingston further states that he had no knowledge that the demolition was proceeding on the weekend of May 3 and 4, 2014, and no one on behalf of the respondent corporation had requested his approval.
[21] I permitted Ms. Nabrotzky to make submissions on why the respondent corporation proceeded to hire Total Demolition Services Inc. and to have the building at 9 Clinton Street South demolished over the weekend of May 3 and May 4, 2014 without a demolition permit. Ms. Nabrotzky made submissions that the respondent corporation had previously obtained a demolition permit for the building in 2012. It was her belief that the revival of her corporation on December 9, 2013 had also resurrected the demolition permit previously issued by the Municipality of South Bruce.
[22] The demolition permit issued in 2012 to demolish 9 Clinton Street South had been revoked in a letter from the Municipality of South Bruce on August 30, 2013 under Section 10 of the Building Code Act, 1992. The permit was revoked because of unreasonable delay in proceeding with the work as 11 months had lapsed with no work being completed. The demolition permit had also been revoked because it had been issued to the respondent corporation which at the time was not the owner of the property as the respondent corporation had been dissolved or cancelled by the Ministry of Government Services in 2006.
[23] The letter from the applicant municipality that revoked the demolition permit issued in 2012 was sent to the office of the Public Guardian and Trustee because the property of the respondent corporation vested in the Crown upon dissolution pursuant to Section 244 of the Business Corporations Act. The letter was copied to 1260964 Ontario Inc. in care of Ms. Nabrotzky at 9 Clinton Street South as that was the address of the building. Another copy of the letter was sent to Ms. Nabrotzky at 11 Clinton Street South as the registered address for the respondent corporation.
[24] Ms. Nabrotzky made submissions to the court that when the respondent corporation was subsequently revived on December 9, 2013, the revival had the effect of reinstating the demolition permit issued in 2012.
[25] Section 242(1)(b) of the Business Corporations Act provides that despite the dissolution of the corporation, a civil, criminal or administrative action or proceeding may be brought against the corporation as if the corporation had not been dissolved. This would apply to the application made by the applicant municipality to the court resulting in Justice Thompson’s order.
[26] Section 241(5), the Business Corporations Act sets out the effect of a revival of a corporation that has been dissolved under subsection (4) by the director as follows:
Section 241(5)
Where a corporation is dissolved under subsection (4) or any predecessor of it, the Director on the application of any interested person, may, in his or her discretion, on the terms and conditions that the Director sees fit to impose, revive the corporation; upon revival, the corporation, subject to the terms and conditions imposed by the Director and to the rights, if any, acquired by any person during the period of dissolution, shall be deemed for all purposes to have never been dissolved. 1999, c. 12, Sched. F, s. 9.
[27] There is nothing in the evidence or by virtue of the Business Corporations Act to support the argument that Ms. Nabrotzky had reason to believe that the demolition permit issued to the respondent corporation in 2012 had been reinstated upon the revival of the corporation. In fact, there is a good argument that since 1260964 Ontario Inc. had been dissolved prior to 2012, the respondent corporation had never even applied for, and had therefore never obtained a demolition permit. Even if the legal effect of reviving the corporation in December 2013 had the retroactive effect of recognizing that the respondent corporation had somehow regained the capacity to apply for and to obtain a demolition permit in 2012 by operation of Section 241(5), the intervening act of the applicant municipality to revoke that demolition permit on August 30, 2013 cannot be ignored.
[28] I am therefore of the view that Ms. Nabrotzky knew or ought to have known that the demolition permit issued in 2012 was not valid. Ms. Nabrotzky has no basis in law to argue that the respondent corporation was entitled to rely upon the demolition permit from 2012 when it directed its agent Total Demolition Services Inc. to demolish the building at 9 Clinton Street South during the first weekend in May 2014. Accordingly, the respondent corporation acted contrary to paragraph 11 of Justice Thompson’s order dated December 17, 2013.
[29] The starting point on any contempt motion is to recognize that court orders must be obeyed. The Court of Appeal has recently restated this fundamental premise in Boily v. Carleton Condominium Corporation No. 145, 2014 ONCA 574 in the following terms:
80 The purpose of a penalty for civil contempt is to enforce compliance with a court order and to ensure societal respect for the courts: Vidéotron Ltée v. Industries Microlec Produits Électroniques Inc., 1992 CanLII 29 (SCC), [1992] 2 S.C.R. 1065, at 1075. The remedy for civil contempt is designed not only to enforce the rights of a private party (See: Poje v. Attorney General (B.C.), 1953 CanLII 34 (SCC), [1953] 1 S.C.R. 516 at 517; Frontenac Ventures Corp. v. Ardoch Algonquin First Nation, 2008 ONCA 534, 91 O.R. (3d) 1, at para. 37), but also to enforce the efficacy of the process of the court itself. Justice McLachlin powerfully expressed this broader purpose in United Nurses of Alberta v. Alberta (Attorney General), 1992 CanLII 99 (SCC), [1992] 1 S.C.R. 901 at 931, stating:
[t]he rule of law is directly dependent on the ability of the courts to enforce their process and maintain their dignity and respect. To maintain their process and respect, courts since the 12th century have exercised the power to punish for contempt of court.
[30] Given the sanctity of court orders and the gravity of the offence if a party is found in contempt for noncompliance with an order, the courts have developed a specific test that is to be strictly applied in order for a person to be found in contempt. In Hobbs v. Hobbs, 2008 ONCA 598, [2008] O.J. No. 3312 (Ont. C.A.), the Court of Appeal confirmed that to find contempt, the court must apply the following test to find:
(a) a clear and unequivocal order as to what must be done or not done;
(b) a deliberate or willful disobedience of the order; and
(c) proof of those matters on a criminal standard, which is beyond a reasonable doubt.
[31] I find that Justice Thompson’s order was clear and unequivocal about what the respondent corporation must do. The respondent corporation was ordered to obtain a demolition permit if it intended to demolish the building. It was required to comply with all requirements of the Chief Building Official and any and all legislation and authorities with respect to demolition of the building. These requirements and the legislation and authorities with respect to the demolition of the building would have been made available to the respondent corporation if and when it applied for the demolition permit.
[32] The respondent corporation deliberately chose to ignore that order. Even if Ms. Nabrotzky was of the mistaken belief that the demolition permit obtained in 2012 complied with the court order, she was wilfully blind to the legal effect of reviving the corporation, and wilfully blind to the requirements of the Chief Building Officer.
[33] The elements of wilful blindness was discussed by the Supreme Court of Canada in R. v. Briscoe, 2010 SCC 13, where Justice Charron described it this way at paragraph 21:
21 Wilful blindness does not define the mens rea required for particular offences. Rather, it can substitute for actual knowledge whenever knowledge is a component of the mens rea. The doctrine of wilful blindness imputes knowledge to an accused whose suspicion is aroused to the point where he or she sees the need for further inquiries, but deliberately chooses not to make those inquiries. See Sansregret v. The Queen, 1985 CanLII 79 (SCC), [1985] 1 S.C.R. 570, and R. v. Jorgensen, 1995 CanLII 85 (SCC), [1995] 4 S.C.R. 55. As Sopinka J. succinctly put it in Jorgensen (at para. 103), "[a] finding of wilful blindness involves an affirmative answer to the question: Did the accused shut his eyes because he knew or strongly suspected that looking would fix him with knowledge?"
[34] According to Canada Housing and Mortgage Corporation v. Evan Gray, 2013 ONSC 1986, the onus to prove wilful blindness of another rests on the party alleging the wilful blindness. In this case, Ms. Nabrotzky has either ignored or acted in a manner oblivious to the fact that the 2012 demolition permit was revoked, and that no further permit was ever obtained to demolish the building at 9 Clinton Street South. The wilful blindness of Ms. Nabrotzky as the officer and director of the respondent corporation as an excuse to disobey a court order is no excuse at all. In the context of a motion for contempt, wilful blindness of circumstances that require strict compliance with an order of the court is equal to the wilful disobedience of a court order.
[35] Ms. Nabrotzky candidly advised the court that she does not intend to remediate the demolition site at 9 Clinton Street South until she is ready to rebuild on that site. Ms. Nabrotzky referred in her submissions, and in her affidavit material and factum filed with the court, to the complaint she has made to the Municipality of South Bruce about “electromagnetic contamination” that she alleges the streetlights are causing along Clinton Street South. Ms. Nabrotzky believes that this “electromagnetic contamination” is causing issue with flower planters, lamp posts and the neighboring property she owns at 11 Clinton Street South from which she operates a floral business. Ms. Nabrotzky informed the court that she does not intend to rebuild at 9 Clinton Street South until the applicant municipality resolves her complaint.
[36] I found that the applicant municipality had provided proof that the respondent corporation was in breach of the order of this court made on December 17, 2013 beyond a reasonable doubt. I therefore found the respondent corporation to be in contempt of court.
Breach of the Emergency Order
[37] I have determined that the failure of the respondent corporation to obtain a demolition permit constituted a breach of Justice Thompson’s order in a manner that amounted to contempt of court. I now turn to my finding that the respondent corporation breached the Amended order to comply, also known as the “emergency order”, issued by the applicant municipality dated September 26, 2013.
[38] Where a party is found to have breached an order issued by a municipality under the Building Code Act, 1992, the court is given the power to grant compensation to the applicant municipality and to make an order for that compensation to be enforced as a priority lien against land on which the work was done.
[39] The applicant municipality issued the emergency order when its Chief Building Officer, Kirk Livingston, formed the opinion that the building at 9 Clinton Street South posed an immediate danger to the health or safety of its occupants, or to the public and passersby on the sidewalk and city street adjacent to those premises. The emergency order was issued under section 15.10(1) of the Building Code Act, 1992, which reads as follows:
Emergency order where immediate danger
15.10(1) If upon inspection of a building an inspector is satisfied that the building poses an immediate danger to the health or safety of any person, the chief building official may make an order containing particulars of the dangerous conditions and requiring remedial repairs or other work to be carried out immediately to terminate the danger. 2002, c. 9, s. 26.
[40] The emergency order was confirmed by the court on December 17, 2014 as required by section 15.10(7). The emergency order therefore became, in a very real sense, enforceable as an order of the court.
[41] The emergency order contained three conditions. The first and second condition required the respondent corporation to obtain a demolition permit before taking down the building, and to carry out that work safely. The third condition read as follows:
- The building to be totally demolished, including the removal of all debris, leaving the subject lot in a clean and safe condition for the public, as approved by the chief building official, on or before May 15, 2014
[42] The power of the court to grant compensation to a municipality for completing the work required of another person subject to an emergency order is given under section 15.10(8) of the Building Code Act, 1992. This provision allows the court to determine whether the amount spent on measures to terminate the danger for which the emergency order was issued may be recovered in whole, in part or not at all.
[43] Section 15.10(10) provides that if the building is in a municipality, the amount determined by the judge to be recoverable shall be a lien on the land and shall have priority lien status as described in section 1 of the Municipal Act, 2001. Section 1 of the Municipal Act, 2001 provides that where an amount is given priority lien status under that Act or any other Act, the amount may be added to the tax roll against the property. Section 1(3) states as follows:
Priority lien status
1(3) If an amount is added to the tax roll in respect of a property under subsection (2.1) or (2.2), that amount, including interest,
(a) may be collected in the same manner as taxes on the property;
(b) may be recovered with costs as a debt due to the municipality from the assessed owner of the property at the time the fee or charge was added to the tax roll and from any subsequent owner of the property or any part of it;
(c) is a special lien on the property in the same manner as are taxes under subsection 349 (3); and
(d) may be included in the cancellation price under Part XI in the same manner as are taxes on the property. 2002, c. 17, Sched. A, s. 1 (2).
[44] The structure of Justice Thompson’s order and the scheme under the Building Code Act, 1992 are strikingly similar. The order provides that the respondent corporation was required to take down the building and that it was to obtain a demolition permit and to comply with all legislative and safety precautions for that work. If it chose not to do so, or defaults on those requirements, the applicant municipality had the right to complete that work. The Building Code Act, 1992 follows the same scheme.
[45] The applicant municipality is authorized under section 15.10(1) to make an order containing particulars of dangerous conditions and requiring remedial repairs or other work to be carried out immediately. The municipality may issue an order to terminate the danger upon inspection of a building if an inspector is satisfied that the building poses immediate danger to the health or safety of any person. In section 15.10(3), after making an order under section 15.10(1), the chief building official is given the discretion to take any measures necessary to terminate the danger. The amount spent on those measures to terminate the danger are recoverable under section 15.10(8)(b), in whole, in part or not at all.
[46] In this way, if the landowner does not carry out the work required by the municipality under an order to comply, the municipality as the statutory right to complete that work at the landowner’s cost. One way or another, the landowner will pay. The difference is, of course, that he or she loses control of the work and the municipality may seek recovery from the landowner.
[47] Justice Thompson confirmed the emergency order in his order dated December 17, 2014. According to section 15.10(9) of the Building Code Act, 1992, that order is final. There is no need for me to determine whether there were valid grounds to make that emergency order, and there is certainly no request or jurisdiction for this court to review the findings behind the making of that order. I need only look at whether all or part of the cost to the applicant municipality to terminate the danger may be recovered.
[48] This line of inquiry is separate and distinct from my finding that the respondent corporation, willfully or with willful blindness, breached the court order requiring a demolition permit when its contractor took down 9 Clinton Street South in Teeswater.
[49] This court in Georgina (Town) Chief Building Official v. Anagnostopoulos, [2007] O.J. No. 3263 considered seven orders issued by the chief building officer for the Town of Georgina against four individual structures at a confirmation hearing. The application involved a claim by the Town to recover $13,241.73 incurred by the Town for the demolition work, the supply and installation of a safety fence, supply and grading of fill on the site and removal of all garbage and debris.
[50] It is not enough for the respondent corporation to complain that being required to repay the applicant municipality for the cost of removing debris and garbage from the site, and the filling in of the foundation with inert material would work a hardship on the corporation. In Georgina, the court concluded that the hardship experienced was entirely the result of their own failure to secure the property in issue despite seven separate orders and a fire code violation charge. Consequently, any hardship arising was not a reason for the court to determine that the chief building officer had acted unreasonably.
[51] The court in Georgina was essentially saying that the respondent had brought the costs of repair and remediation upon itself and had no reason to complain. I would say that the same applies to the respondent corporation in this case, and for the same reason. The evidence establishes the failure of the respondent corporation to clean up the site where the building was taken down, and to fill in the cavity where the building once stood with inert material. There is evidence the respondent corporation has done little or nothing to remediate the site since May or June 2014. The state of disrepair of the lot allows water to pool, and could lead to other conditions such as harbouring wildlife that may pose a safety concern to the town residents.
[52] The court in Sutherland Lofts Inc. v. St. Thomas (City), [2008] O.J. No. 2840 also stands as authority for the applicant municipality to act where the respondent corporation does not. Justice Little permitted the City to proceed with demolition of the property in that case upon concluding that “the City is effectively being held hostage, as are its citizens, by an apparent shell corporation that has proven itself unreliable.”
[53] In the case before me, the applicant municipality had obtained an opinion from a professional engineer that the building was unsafe. The applicant municipality therefore seeks an order recovering the fees of that professional engineer as part of the expense to terminate the danger under section 15.10(8) of the Building Code Act, 1992. These facts are similar to those in Shaw v. Dorion (Municipality), [2007] O.J. No. 3945, where the court permitted the municipality to recover the engineering fees for the inspection and report given by the engineer. The professional fees awarded were then characterized as a lien upon the land of the respondent corporation.
[54] Accordingly, I find that the applicant corporation is entitled to recover expenses in the amount of $28,381.18 plus any landfill costs incurred to dispose of the debris and garbage to remediate 9 Clinton Street South, pursuant to section 15.10(8) of the Building Code Act, 1992. The amount awarded includes $2,202.26 for the cost of retaining the professional engineer to inspect and report on the condition of the building. Also included in the amount awarded is the estimated cost of $1,926.21 to repair damage to the sidewalk and boulevard caused by the demolition of the building at 9 Clinton Street South. I find that this amount should be included because the damage to the sidewalk and boulevard was caused by the respondent corporation as a direct consequence of the building demolition. I hereby make the order that the amount awarded for these expenses shall have priority lien status under section 1(3) of the Municipal Act.
Costs
[55] This is my decision on costs, both for the application heard by Justice Thompson and for the applicant’s motion for contempt heard on March 5, 2014.
For the Application
[56] I conclude that only the respondent corporation can be held liable for the costs of the application heard by Thompson J. as Ms. Nabrotzky is not a party to the application. At the time the application was heard, the respondent corporation was not in contempt of that order that had not yet been made. Therefore, there is no avenue through Rule 60.11(6) to seek recovery from Ms. Nabrotzky personally under Rule 60.11(5)(e) of the Rules of Civil Procedure.
[57] The costs of the application must therefore be awarded on applicable principles under the law of costs. Under section 131(1) of the Courts of Justice Act, costs of a proceeding or any step in a proceeding are within the discretion of the presiding judge. When determining costs, the court is to consider the factors set out in Rule 57.01(1). Those factors include the result in the step or in the proceeding, the importance and complexity, the amount involved and any other matter relevant to the issue of costs.
[58] I have taken into consideration those factors under section 57.01(1) relevant to the matters at issue between the parties. There is no reason that the normal rule that costs should follow the event should not be followed. On the application, the applicant municipality was clearly the successful party. The matter was of importance to both the applicant municipality and the respondent corporation. However, the respondent corporation made the matters on the application unnecessarily complex because Ms. Nabrotzky exercised excessive caution when making decisions for the corporation. That caution caused the applicant municipality greater expense than it would have otherwise incurred.
[59] The application was also unduly complex because the respondent corporation had been dissolved several years before, thereby requiring the applicant municipality to join the Crown as the owner of the property. This was a dimension that added additional cost to the proceeding for the applicant municipality.
[60] I note that Ms. Nabrotzky ultimately gave her consent on behalf of the respondent municipality to the order made by Justice Thompson on December 17, 2013. One has to wonder why the respondent corporation would cause the applicant municipality the time and expense to prepare an application for a contested hearing, only to give its consent to the requested order.
[61] Neither of the parties brought to my attention an offer to settle served prior to the hearing of the application. Therefore, I do not have any basis to consider making an award of substantial indemnity against the respondent corporation under Rule 49.10. Nor do I find that Ms. Nabrotzky exhibited reprehensible or egregious conduct on behalf of the respondent corporation with respect to the application to support an award of substantial indemnity costs against the respondent corporation: Davies v. Clarington, 2009 ONCA 722. The cases are clear that substantial indemnity costs should only be awarded in rare and exceptional circumstances, particularly where reprehensible, scandalous or outrageous behavior merits costs at that level: Foulis v. Robinson, 1978 CanLII 1307 (Ont. C.A.).
[62] I am therefore left with awarding costs to the applicant municipality for the application on a partial indemnity basis. I have reviewed the costs claimed by the applicant municipality and I find the invoices rendered by Ms. Grove-McClement to the applicant municipality to be reasonable. However, when I reduce the entire amount claimed by 40% to reach the level of partial indemnity costs, the cases require me to consider even then what is fair and reasonable under all of the circumstances. This includes a consideration of what the respondent corporation should have reasonably expected to pay as an unsuccessful party: Boucher et al. v. Public Accountants Council for the Province of Ontario et al., 2004 CanLII 14579 (ON CA), [2004] 71 O.R. (3d) 291.
[63] Upon a full consideration of the factors under Rule 57.07(1) and other governing principles on the law of costs, I exercise my discretion to award $12,000 in fees, plus disbursements in the amount of $2,282.67. I therefore award a total of $14,282.67 plus applicable HST for the costs of the application before Justice Thompson on December 17, 2013. These costs are payable by the respondent corporation to the applicant municipality within 30 days.
For the Contempt Motion
[64] The applicant municipality also seeks costs for the contempt motion. This claim for costs is markedly different than the costs leading up to and including the order made by Justice Thompson on December 17, 2013. The costs culminating in the contempt motion relate to a breach of the court order after December 17, 2013. Those costs are also different as they may be awarded at a higher level, and because Ms. Nabrotzky may be ordered to pay those costs as the sole officer and director of the respondent corporation under Rule 60.11(5)(e) and (6).
[65] The Court of Appeal in Boily examined the remedies for contempt available to a party wronged by a contemnor. At paragraph 91, the court of appeal set out the objectives for the sentence imposed in the following terms:
91 The following are the factors relevant to a determination of an appropriate sentence for civil contempt:
a) the proportionality of the sentence to the wrongdoing;
b) the presence of mitigating factors;
c) the presence of aggravating factors;
d) deterrence and denunciation;
e) the similarity of sentences in like circumstances; and
f) the reasonableness of a fine or incarceration.
Echostar Communications Corp. v. Rodgers, 2010 ONSC 2164; Sussex Group Ltd. v. Fangeat, [2003] O.J. No. 3348, [2003] O.T.C. 781 at para. 67 (Ont. S.C.); Builders Energy Services Ltd. v. Paddock, 2009 ABCA 153, at para. 13. Megill, at pp. 7-8.
[66] At paragraph 130, the Court of Appeal stated that the sentence imposed must correspond with the nature of the contempt found by saying:
130 In civil contempt, it is critical that the penalty respond to the conduct being sanctioned. The relevant conduct is the wilful disregard of the authority of the court. The court must assess the seriousness of the disrespect of the court, not the severity of any resulting harm.
[67] I find that to award the costs the applicant municipality seeks on a substantial indemnity basis will serve as a proper sentence to the contempt of the respondent corporation. All the applicant municipality seeks as a remedy for the contempt are those costs and I should therefore make no greater order. To award less than substantial indemnity costs would resemble awarding costs at only a partial indemnity basis. That would not accord with the sentencing principles set out above. Therefore, as the applicant municipality seeks its costs on a substantial indemnity level I should make no lesser order when awarding costs.
[68] The applicant municipality seeks costs for the contempt motion on a substantial indemnity basis in the amount of $35,495.55. This amount can be broken down between the fees representing legal services delivered after December 17, 2013 in the amount of $29,380.50, a counsel fee of $1,215 to attend the motion on March 5, disbursements of $922.63 and applicable HST.
[69] The applicants’ claim these costs based on the hours Ms. Grove-McClement has spent on the file since December 17, 2013 at $270 an hour, which she informed the court is a modest reduction from her hourly rate of $295 an hour. Ms. Grove-McClement claims costs for her time totaling 104.15 hours multiplied by her reduced hourly rate. Ms. Grove-McClement spent approximately 20 hours preparing the motion materials. A further 22 hours were spent communicating with representatives of the applicant municipality and other parties, including Ms. Nabrotzky and Mr. Emerson. Approximately 8 more hours were spent preparing for and attending court before the appearance before me on March 5, 2015. The applicant municipality also seeks costs for 25.2 of a law clerk’s time at $50 an hour to prepare and assemble motion materials.
[70] In my view, the time incurred for all of these services is time well spent. I say this not only in recognition that the applicant municipality as the moving party was required to place the factual elements to prove the contempt of the respondent corporation before the court. I say it also because the applicant municipality was also compelled to answer the materials Ms. Nabrotzky filed with respect to her allegations of “electromagnetic contamination” in a comprehensive, yet compassionate manner.
[71] The greatest concern I have is with the 38.3 hours claimed by counsel for preparing the affidavits of Kirk Livingston and Sharon Chambers in response to the affidavits of Flora Nabrotzky sworn November 12, 2014 and December 15, 2014,and to prepare a factum and book of authorities. Another 11.4 hours was spent to review the affidavit of Ms. Nabrotzky dated February12, 2015 and her factum and book of authorities. This time totaling 49.7 hours gives me the greatest hesitation in granting costs in the amount that the applicant municipality seeks.
[72] I do not think that Ms. Nabrotzky could reasonably have anticipated that filing responding material to the motion would generate an additional costs claim representing almost 50 hours of time, which translates into an additional $13,750 based on the reduced rate used by Ms. Grove-McClement. I am therefore reducing the amount representing this component of the applicant municipality’s claim for costs from $13,750 to $5,000 as part of the costs award.
[73] Ms. Nabrotzky made submissions that she would expect to pay $8,700 for all costs the applicant municipality is seeking, both for the application and the motion for contempt.
[74] In Boucher v. Public Accountant’s Council of Ontario, the court held that costs are not just a product of multiplying the number of hours spent by counsel by an hourly rate. Costs must be fair and reasonable to the party who is ordered to pay those costs, and in an amount that party could reasonably expect to pay if unsuccessful. I am of the view that even where substantial indemnity costs are awarded, costs at that level must be fair and reasonable and consistent with the principles set out in Boucher and other cases.
[75] I therefore award costs for the contempt motion to the applicant municipality for fees in the amount of $20,630, a counsel fee of $1,215 for the attendance in court on March 5, 2015, and disbursements of $922.63 plus applicable HST. The respondent corporation is therefore ordered to pay costs in the amount of $22,767.63 plus HST to the applicant municipality within 30 days.
[76] Rule 60.11 provides that where a corporation is in contempt of court, an order may also be made under subrule (5) against any officer or director of the corporation. Rule 60.11(5) provides the court with the discretion to make such order as is just. Rule 60.11 also provides that where a finding of contempt is made, the court may make an order that the person in contempt pay such costs as are just. If a finding of contempt is made against a respondent corporation under subrule 60.11(6) the court may also make an order against an officer or director of the respondent corporation for the relief available to the moving party under Rule 60.11(5), including an order as to costs.
[77] The contempt of a one person corporation is often, if not always the result of the decisions, action or inaction of its controlling office and director. The respondent corporation in this case is personified by Ms. Nabrotzky. Her action or inaction was the action or inaction of the respondent corporation. Therefore, its costs should be borne jointly and severally by her. The costs I have ordered the respondent corporation to pay for the contempt motion shall be jointly and severally payable by Flora Nabrotzky as costs under Rule 60.11(5)(e) by operation of Rule 60.11(6), within the same 30 days.
[78] Orders to go accordingly.
Emery J
DATE: April 8, 2015
v. 1260964 Ontario Inc., 2015 ONSC 2206
COURT FILE NO.: 86/13 (Walkerton)
DATE: 2015 04 08
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: THE CORPORATION OF THE MUNICIPALITY OF SOUTH BRUCE v. 1260964 ONTARIO INC.
BEFORE: EMERY J.
COUNSEL: Tammy W. Grove-McClement, for the Applicant
Flora Nabrotzky, Director/Officer for the Respondent
Flora Nabrotzky,
In person
REASONS FOR DECISION
EMERY J
DATE: April 8, 2015