Browne v. Toronto Star Newspapers Limited, 2015 ONSC 2968
COURT FILE NO.: CV-08-368821
ENDORSEMENT RELEASED: May 25, 2015
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: SHIRLEY BROWNE v. TORONTO STAR NEWSPAPERS LIMITED, JAGODA PIKE, DON BABICK, DALE BRAZAO and CATHERINE MANUEL
BEFORE: Master R. Dash
COUNSEL: Charles Campbell and Shelina Ali, for the plaintiff
Paul Schabas and Iris Fischer, for the defendants
COSTS ENDORSEMENT
[1] This endorsement deals with the costs of a security for costs motion brought by the defendants under section 12 of the Libel and Slander Act (“LSA”). The motion was heard over three days in December 2014 and January 2015 and was dismissed for reasons released on April 21, 2015. The plaintiff was entirely successful and is entitled to her costs.
[2] I disagree with the defendants that because it was necessary for the court to balance constitutional principles in order to resolve an ambiguity in the statute and conflicting case law, the motion could be considered as one that determined an issue that was novel or of broad public interest such as to deprive the successful party of her costs. This is a private lawsuit for damages for defamation and has no broad public interest save as to its possible jurisprudential value respecting the criteria for motions for security for costs under section 12 of the LSA. I also disagree that the unique circumstances that led to the defendants bringing the motion, including the unexpected death of the trial judge while her decision was under reserve and the mortgaging by the plaintiff of her properties to her lawyers two months before trial should deprive the plaintiff of her costs, although the latter circumstance plays a role in when those costs should be paid. Simply put, the defendants determined to bring a complex motion for security for costs in all of these circumstances, and lost.
[3] In accordance with her costs outline, the plaintiff requests substantial indemnity costs of the motion in the sum of $119,720 (inclusive of $102,677 fees plus disbursements and HST). She sets out her partial indemnity costs as $81,045 (inclusive of $68,451 fees). There was no reprehensible litigation behaviour on the part of the defendants or their lawyers, nor were offers to settle made. There is no basis for elevated costs. They shall be on the partial indemnity scale.
[4] The defendants submit that in the event costs were ordered that they be in the all-inclusive sum of $15,000 and payable to the plaintiff in the cause.
[5] I consider the factors under rule 57.01(1).
[6] The amount at stake on the motion was significant in that the defendants were claiming security for costs in the sum of $713,426 on a partial indemnity scale.
[7] The motion was substantially complex both legally and factually. It was legally complex because the test for security for costs under section 12 of the LSA was unsettled with conflicting jurisprudence on whether the test was conjunctive or disjunctive. The analysis also engaged a balancing of Charter protected values of freedom of expression and of the press with protection of reputation. The meaning of “good defence on the merits” was also unsettled. It was necessary to resolve these legal issues before applying the test to the facts before me. It was also legally complex because the parties set out various aspects of the law that supported their respective positions with respect to justification, fair comment and responsible journalism, all being defences raised at trial.
[8] It was factually complex because the parties had completed a 21 day trial (19 days of evidence and two days of submissions) and the defendants served a seven volume transcript of the trial proceeding. The defendants also filed a four volume motion record, a supplementary motion record, a compendium and a supplementary compendium as well as a factum and authorities. The trial judge had passed away before giving her decision and the defendants in effect attempted to demonstrate to me that the plaintiff had a weak case and that they had a good defence on the merits. They attempted to demonstrate that on the trial evidence they had proven the truth of each of the allegedly defamatory remarks such that the defence of justification would be successful at the second trial. They also attempted to demonstrate the factual foundation in the evidence for the defences of fair comment and responsible journalism.
[9] In response, the plaintiff filed a responding motion record and a two volume compendium as well as a factum and authorities. The motion before me, as presented by the defendants and to which the plaintiffs were forced to respond, was almost akin to determining the trial issues on the written record of the trial. Of course I was not in a position to make findings of credibility, but that did not prevent the defendants from pointing out in the written record and in argument instances of conflict in the plaintiff’s evidence affecting her credibility. This forced the plaintiffs to respond in kind respecting the credibility of Ms. Manuel, the source of the reporter’s information, and of the reporter.
[10] The issues on the motion were important to the plaintiff because she had gone through 4½ years of litigation and a month-long trial to protect her reputation at high financial and emotional cost but was unable to obtain a determination on the merits because of the unfortunate passing of the trial judge. From her perspective she was being asked to post $713,426 security for costs for reasons beyond her control. Of course she did have control over granting mortgages to her lawyers prior to trial, leaving no exigible assets for costs that may be awarded to the defendants. The matter was also important to the defendants because in attempting to demonstrate their responsible reporting in the context of freedom of the press and avoidance of libel chill, they suddenly found themselves in a position of having to retry a lengthy case in circumstances where, unknown to the defendants before the first trial, the plaintiff had made herself virtually judgment proof.
[11] I find nothing in the conduct of either party that tended to unnecessarily shorten or lengthen the duration of the proceeding. The fact that the defendants adopted an approach of presenting the entirety of the trial evidence on the motion may have been unnecessary, but I need not determine that, because the voluminous materials and three days of argument are covered by the complexity factor and certainly resulted in the extensive work required to be done by the plaintiff.
[12] Principles of indemnity including the experience of the involved lawyers and time spent and rates are important factors, although the fixing of costs is more than a mathematical exercise of multiplying rates by hours. The court must fix costs that are fair and reasonable and within the reasonable expectations of the losing party.[^1]
[13] Mr. Campbell is an experienced senior litigator but his hourly rate claimed on a partial indemnity scale of $315 is approximately 75% of his actual billing rate of $425. A partial indemnity rate should normally be closer to 2/3 of a lawyer’s substantial indemnity rate as suggested by rule 1.03.[^2] I agree with the defendants that a partial indemnity rate of $300 would be more appropriate[^3]. He has charged for 151.6 hours including preparation and attendance at the three days of hearing. Ms. Ali put in 92.8 hours in preparation and attendance. Her billing rate increased from $180 to $210 over the course of the litigation and the defendant claims for her time based on hourly partial indemnity rates of $162 and $189. I agree with the defendants that $150 is more appropriate. Law clerks have put in time of 46.9 hours and the hourly rate claimed on a partial indemnity scale of $80 is appropriate. Simply changing the hourly rates would reduce the fees on a partial indemnity scale to $63,621 plus HST and disbursements. As stated however, the fixing of costs involves more than multiplying hours by hourly rates.
[14] Mr. Campbell claims that he did the bulk of the preparation because of his experience in defamation matters and because it would more effectively allow him to respond to the court’s enquiries during argument. While I do not criticize that this choice was of benefit to the plaintiff, I agree with the defendants that it is not a choice for which the defendants should be obliged to pay at senior counsel’s rate, particularly for preparation of written material which competent junior counsel was available to perform at a lower billing rate. As such, in my view, the rate charged for part of Mr. Campbell’s time should be discounted to reflect the rates of more junior counsel.[^4]
[15] Further, while there was a division of labour as among Mr. Campbell, Ms. Ali and the law clerks, the defendants point out that a review of the dockets suggests that there is some duplication of effort, including internal discussions between lawyers or between lawyers and law clerks and of one lawyer reviewing the work of the other as both spent significant time on preparation of the factum. My own review of the dockets comes to a similar conclusion, but the overlap in my view is not substantial. There also appears to be a few dockets not related to the motion, but to trial scheduling. Preparation of a notice of constitutional question that was never filed should also not be chargeable as costs of the motion, but the time spent was not significant.
[16] There is no foundation however for the defendants’ submission that based on Mr. Campbell’s experience and expertise, the tasks performed by him should have been accomplished in less time or that the quantum of time billed is indicative of inefficiencies. I also find no merit in the submissions that Mr. Campbell’s and Ms. Ali’s familiarity with the facts based on their involvement at the first trial, including written submissions to the trial judge, should have resulted in less time being spent in preparation for the motion. The volumes of trial transcript and the approach to the motion by the defendants (demonstrating each justification) required an extensive review of the materials to respond to each defence.
[17] The defendants also suggest that there needs to be some proportionality of costs for this 2½ day motion as against the security for costs of $120,000 that I would have ordered for the 14 day re-trial, if security had been ordered. The defendants however had sought security for costs for the second trial of $238,030, including fees on a partial indemnity scale of $201,255. I was not making a determination of costs which might be awarded for the retrial, but the quantum of those costs for which security would have been granted. Reductions to that quantum were made for a variety of reasons. Further, the quantum of security was based on projected costs, not actual costs, whereas on the motion for security they were based on actual costs incurred supported by time dockets. Part of the security claimed was for $2,000 costs per day of trial and as such the difference in counsel fee between 14 days (for the re-trial) and 2½ days (for the motion) amounts to only $23,000 of the total. Also, while clearly it would take more time to prepare for the re-trial than for the motion for security, the defendants were preparing a second time for matters that they already prepared for once. On the other hand, the preparation for the motion for security involved not only a review and summary of much of the evidence and submissions at the first trial in order to argue whether the defendants had a “good defence on the merits” but also involved additional issues related to the test for security that would not be issues at the retrial. Therefore, while it is fair for the defendants to raise the issue of proportionality of the costs of the motion with the quantum of security that would have been ordered for the re-trial had security been ordered, the suggestion by the defendants that $15,000 is appropriate and proportional has no merit.
[18] Given the volumes of materials put in by the defendants that had to be reviewed by the plaintiff and the material that had to be prepared by the plaintiff in response, I do not find the hours put in by plaintiff’s lawyers and clerks excessive, subject to the comments made about appropriate rates and duplication of service, although as has been stated, the court must fix costs that are fair and reasonable and within the reasonable contemplation of the defendants and not simply multiply hours spent by appropriate rates.
[19] The defendants suggest that the $81,045 partial indemnity costs requested by the plaintiff for this step in the proceeding are “highly excessive” and that $15,000 is more appropriate. I am however hampered in my determining whether the costs as suggested by the defendants are fair and reasonable and whether the costs claimed by the plaintiff would be within their reasonable expectations since I have neither been provided with the costs outline of the defendants nor advised of the time spent by defendants’ three lawyers and any students or legal assistants. Given the voluminous materials prepared by the defendants, their extensive arguments on complex issues and the fact that three lawyers sat at counsel table during the hearing, I would be surprised if the defendants’ request for costs of the motion, had they been successful, would have been as low as the $15,000 suggested as appropriate for the plaintiff’s costs and would likely have been considerably in excess of that amount.
[20] I take no issue with the disbursements claimed of $3270.
[21] In my view, considering the complexity and importance of the motion, the actual fees and disbursements incurred and the other factors enumerated under rule 57.01(1), costs of $50,000 inclusive of HST and disbursements for the motion are fair and reasonable and should have been within the reasonable expectation of the defendants.
[22] The final issue is the determination of when those costs should be paid. The presumptive order as set out in rule 57.03(1)(a) is that they be paid within 30 days “unless the court is satisfied that a different order would be more just”. As I stated in my reasons on the motion, one of the unusual circumstances leading up to this motion was:
[S]hortly before commencement of the trial, the plaintiff granted a half million dollar mortgage to her lawyers on her property, substantially reducing if not eliminating any equity therein which could otherwise have been exigible for the payment of any adverse cost award.[^5]
While I found nothing unethical or deceitful about the plaintiff providing security to her lawyers for their fees, as this involves an access to justice to issue, I concluded that it “does however mean there will be nothing left for the defendants should costs be awarded in their favour” at trial.[^6]
[23] I agree with the defendants that in these unique circumstances it would be unfair to require them to pay the costs of this motion now when, if they are successful at trial, they will likely be awarded a larger sum for costs which the plaintiff will be unable to pay. I therefore agree with the defendants that costs of this motion be payable after trial. In these unique circumstances, that would, using the words of rule 57.03(1)(a), be “more just” than payment within 30 days from now.
[24] I do not however agree with the defendants that the costs be payable to the plaintiff in the cause i.e. that the plaintiff would be entitled to her costs of this motion only if successful in the action. This motion was a distinct and separate step in the proceeding. Although the merits of the defence played a role in the motion, the determination of the motion was not tied to the success of those defences at trial. As reflected in rules such as rule 57.03 that sets out presumptive rules for costs of a motion and the requirement in rule 57.01(6)for a separate costs outline for a step in the proceeding as well as the reference in section 131 of the Courts of Justice Act to costs of a “step in the proceeding”, costs of a motion are set up as a separate regime from the costs of an action and depend on factors that include success on the motion and not on success at trial. The defendants took a chance on bringing this motion and the plaintiff is entitled to her costs of the motion whether or not she is successful at trial.
[25] In my view the most fair and reasonable disposition is that costs be payable to the plaintiff in any event of the cause. As a result, if the defendants are successful at trial they may set off the costs owing to the plaintiff on this motion against the costs awarded to them for the action. As noted, they may be unable to collect the balance of those costs from the plaintiff. If the plaintiff is successful at trial, then the costs awarded today will be added to the costs payble by the defendants for the action.
ORDER
[26] The defendants shall pay to the plaintiff her costs of the motion for security for costs in any event of the cause fixed in the sum of $50,000 inclusive of disbursements and HST.
Master R. Dash
DATE: May 25, 2015
[^1]: Boucher v. Public Accountants Council for the Province of Ontario (2004) 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.) at paras. 24-26 and 38
[^2]: Rule 1.03 defines a substantial indemnity rate as 1.5 times what would otherwise be awarded in accordance with Part I of Tariff A, which in turn requires a determination of fees in accordance with section 131 of the Courts of Justice Act and the factors set out in rule 57.01(1).
[^3]: A rate as low as $285 would have also been appropriate.
[^4]: For example in Romspen Investments Corp. v. 6711162 Canada Inc., 2014 ONSC 3480 (SCJ) at para. 4 the court stated: “The principle of indemnification for reasonable costs requires the appropriate delegation to less expensive time-keepers of legal tasks which do not require the skill and experience of a senior counsel.” See also Paletta v. Paletta, [2003] O.J. No. 5197 (SCJ) at paras. 6-7 and Fontaine v. Canada (Attorney General), 2012 ONSC 3552 (SCJ) at para. 10.
[^5]: Browne v. Toronto Newspapers Limited, 2015 ONSC 2376 at para. 4.
[^6]: Ibid, at para. 34