Court File and Parties

COURT FILE NO.: CV-15-18 DATE: 2016/06/28 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Charles Crober and Christopher Rowntree on behalf of Concerned Citizens of South Dundas Applicants

– and –

The Corporation of the Municipality of South Dundas and The Chief Building Official of the Municipality of South Dundas and Morrisburg Dock Expansion Inc. Respondents

Counsel: Roberto Ghignone, counsel for the Applicants G. Eldon Horner, counsel for the Respondents, The Corporation of the Municipality of South Dundas and The Chief Building Official of the Municipality of South Dundas Gordon Petch and Zaid Sayeed, counsel for Morrisburg Dock Expansion Inc.

Written submissions filed: May 31, 2016

Ruling on costs

LALIBERTE, J.

Introduction

[1] On January 19, 2016, the Court released its Reasons for Judgment in this matter. The CBO’s decision to issue the impugned building permit was affirmed resulting in the dismissal of the Applicants’ Appeal under section 25 of the Building Code Act.

[2] The Court is now asked to rule on the issue of costs for these proceedings as between the Applicants and the Respondent, Morrisburg Dock Expansion Inc. The question of costs in regards to the Municipality was resolved on consent.

[3] Both parties have filed significant materials in support of their respective position. The Applicants have retained new counsel.

[4] The Respondent claims substantial indemnity costs in the amount of $166,971.87 for fees, $21,706.34 for H.S.T. and $31,292.23 for disbursements, payable forthwith. In the alternative, it claims partial indemnity costs up to September 18, 2015 and substantial indemnity costs thereafter for a total of $148,941.35 for fees, $19,362.38 for H.S.T. and $31,292.23 for disbursements, to be paid forthwith.

[5] The following points are argued by the Respondents in its written submissions of May 9 and May 31, 2016:

• The Applicants’ reprehensible and outrageous conduct justifies an award of substantial indemnity costs; for example:
  • failing or refusing to identify the proper Applicant despite repeated requests;
  • failure and refusal to meet undertakings and timetables;
  • refusing to approve Court order to obtain inappropriate advantage;
  • attempting to file materials after second Court ordered and peremptory timetable.
• The adoption of a “shotgun-style” approach in that they pleaded a multitude of legal and factual positions in an obtuse manner with little regard to corroborating evidence, argument or the law; this in turn increased the Respondent’s costs;
• They did not obtain clear or supportive planning advice;
• They did not pursue the matter with diligence; there was urgency in these proceedings;
• They refused a valid Rule 49 offer to settle which was more favourable than the Court’s ruling;
• Their materials were unfocused and confusing;
• They are not public interest litigants;
• The $76,714.23 claimed by the Respondent Municipality is comparable on a pari passu review;
• Any costs order should be immediately enforceable;
• While it is true that this matter should not have been complex, it was made so procedurally and substantially by the Applicants through their counsel; the Respondent, in turn, took every available opportunity to reduce costs, shorten proceedings, simplify issues or achieve a settlement at every stage of this litigation.

[6] The Applicants are not disputing the Respondent’s entitlement to costs. Their view is that the amount claimed is excessive and unreasonable.

[7] Their view is that $20,000.00 is an appropriate amount. If the Court finds that they are not public interest litigants, the proper amount is $40,000.00 all inclusive.

[8] They raise the following:

• the amount claimed is disproportionate to the matters at issue, the complexity of the proceeding and contrary to the reasonable expectations of the Applicants who ought to be considered as public interest litigants;
• the awarding of costs in the amount claimed would undermine the goals of proportionality and access to justice; this would validate the “money is no object” approach adopted by the Respondent in this matter;
• the Respondent’s bill of costs is unreasonable and excessive;
• it is not entitled to costs on a substantial indemnity basis;
• payment of costs award should be delayed for a period of 90 days.

[9] Therefore, the issue for the Court is to set the amount of the costs award payable by the Applicants to the Respondent, Morrisburg Dock Expansion Inc.

The Law

[10] In deciding this issue, the Court is guided by the following principles:

• Section 131 Courts of Justice Act

  131 (1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.

• Rules of Civil Procedure

  Rule 1.04 (1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.

  (1.1) In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.

  Rule 57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,

  (0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;

  (0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

  (a) the amount claimed and the amount recovered in the proceeding;

  (b) the apportionment of liability;

  (c) the complexity of the proceeding;

  (d) the importance of the issues;

  (e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

  (f) whether any step in the proceeding was,

  (i) improper, vexatious or unnecessary, or

  (ii) taken through negligence, mistake or excessive caution;

  (g) a party’s denial of or refusal to admit anything that should have been admitted;

  (h) whether it is appropriate to award any costs or more than one set of costs where a party,

  (i) commenced separate proceedings for claims that should have been made in one proceeding, or

  (ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and

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

  (4) Nothing in this rule or rules 57.02 to 57.07 affects the authority of the court under section 131 of the Courts of Justice Act,

  (a) to award or refuse costs in respect of a particular issue or part of a proceeding;

  (b) to award a percentage of assessed costs or award assessed costs up to or from a particular stage of a proceeding;

  (c) to award all or part of the costs on a substantial indemnity basis;

  (d) to award costs in an amount that represents full indemnity; or

  (e) to award costs to a party acting in person.

  Rule 49.10(2) Where an offer to settle,

  (a) is made by a defendant at least seven days before the commencement of the hearing;

  (b) is not withdrawn and does not expire before the commencement of the hearing; and

  (c) is not accepted by the plaintiff,

  and the plaintiff obtains a judgment as favourable as or less favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer was served and the defendant is entitled to partial indemnity costs from that date, unless the court orders otherwise.

  Rule 49.13 Despite rules 49.03, 49.10 and 49.11, the Court in exercising its discretion with respect to costs, may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer.

Purposes of Costs

• Fong v. Chan, [1999] O.J. No. 4600, paragraph 24:

  “24. …modern cost rules are designed to foster three fundamental purposes: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlements; and (3) to discourage and sanction inappropriate behaviour by litigants.”

• Davies v. The Corporation of the Municipality of Clarington, 2009 ONCA 722, [2009] O.J. No. 4236 paragraph 52:

  “52. As can be seen, the overriding principal is reasonableness. If the judge fails to consider the reasonableness of the costs award, the result can be contrary to the fundamental objective of access to justice. Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the Court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant. In Boucher, this Court emphasized the importance of fixing costs in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, at para. 37, where Armstrong J.A. said “the failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice.””

Offer to Settle and Dismissal of Claim

• Rule 49.10(2), offer to settle by a defendant has no application where the plaintiff’s claim fails and dismissed

• S. & A. Strasser, [1990] O.J. No. 2321

• Davies v. The Corporation of the Municipality of Clarington op. cit. paragraph 40:

  “40. …Apart from the operation of rule 49.10, elevated costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made.

  As Austin J.A. established in Scopillati, Strasser should be interpreted to fit within this framework – as a case where the trial judge implicitly found such egregious behaviour, deserving of sanction.

• This point was reinforced by the Ontario Court of Appeal in Iannabella v. Corbett, 2015 ONCA 110, [2015] O.J. No. 726 at paragraph 139:

  “139. The development of this Court’s approach to awards of substantial indemnity costs has evolved since Strasser, as this Court noted in Davies v. Clarington …Outside of rule 49.10, to make such an award as a matter of judicial discretion the court must find that the party has been guilty of egregious misconduct in the proceeding.”

Public Interest Litigants

• Carter v. Canada (Attorney General), 2015 SCC 5, [2015] 1 S.C.R. 331, paragraph 140:

  “140. In our view, with appropriate modifications, this test serves as a useful guide to the exercise of a judge’s discretion on a motion for special costs in a case involving public interest litigants. First, the case must involve matters of public interest that are truly exceptional. It is not enough that the issues raised have not previously been resolved or that they transcend the individual interests of the successful litigant: they must also have a significant and widespread societal impact. Second, in addition to showing that they have no personal, proprietary or pecuniary interest in the litigation that would justify the proceedings on economic grounds, the plaintiffs must show that it would not have been possible to effectively pursue the litigation in question with private funding. In those rare cases, it will be contrary to the interest of justice to ask the individual litigants (or, more likely, pro bono counsel) to bear the majority of the financial burden associated with pursuing the claim.”

Discussion

[11] The application of the relevant principles in this matter brings the Court to find that a costs award of $121,692.23 in favour of the Respondent Morrisburg Dock Expansion Inc. payable by the Applicants within three months is fair and reasonable. It serves to indemnify, in part, the successful litigant, encourage settlement and sanction inappropriate behaviour.

[12] This ruling is based on the following considerations:

1. The applicants are not considered to be public interest litigants. They do not meet the high threshold set by the Supreme Court of Canada. Their claim and the issues raised do not translate to a “rare and exceptional case.”

   While the issuance of the impugned permit by the CBO has raised controversy in the community, this does not, in and of itself, elevate these proceedings to a matter of public interest that is truly exceptional. There is no evidence of a “significant and widespread societal impact.”

   The core issue in this matter revolved around the interpretation of a zoning by-law. This is very fact specific. It does not raise novel issues. Nor does it transcend beyond the immediate interests of the parties involved.

   The concerns raised by this building permit are found to be personal to the Applicants by reason of their proximity to the proposed project. It cannot be said that the Applicants have no personal, proprietary or pecuniary interest in the litigation that would justify the proceedings on economic grounds.

   As already noted, reliance on public interest as a means of tempering costs must also be based on evidence that “it would not have been possible to effectively pursue the litigation in question with private funding.” The Court was not provided with any evidence in regards to the financial circumstances of the Applicants and their ability to fund this litigation privately. They bear the burden of proof. The Court cannot speculate.

   The end result is that this is not one of the rare cases when it is contrary to the interests of justice to ask the individual litigants to bear the majority of the financial burden associated with pursuing a claim.

2. The Respondent’s offer of September 18, 2015 and the Applicants’ failure to accept do not trigger the operation of costs consequences under Rule 49.10(2) of the Rules of Civil Procedure. The dismissal of the Appeal under section 25 of the Building Code Act makes it such that there is no entitlement to substantial indemnity as of the date of the said offer as argued by the Respondent.

3. There is no question that the Applicants’ conduct, through counsel, was, at times, troubling. The cumulative effect of their actions or lack thereof is supportive of the Respondent’s claim that they were intent on delaying the proceedings. The more notable examples are:

   • Ignoring reasonable requests by the Respondent such as confirmation of who would be liable for costs;
   • Not following up on undertakings given to opposite counsel;
   • Not abiding with the terms of a Court-ordered timetable;
   • Refusing to approve Court order in light of a clear endorsement;
   • Attempting to file a second Factum after the set date for same in the Court-ordered timetable.

   This resulted in a flurry of e-mails and letters going back and forth between counsel. It gave rise to threats of bringing motions, drafting of motion materials and actual court appearances on motions. It would seem that the true essence of this Appeal was lost to process. The unfortunate result is that this generated substantially more legal costs.

   These concerns are shared by the Applicants’ new counsel. In a February 16, 2016 e-mail sent by him to opposite counsel, he states:

   “One issue that will likely complicate costs submissions more complex is that it appears that at least a portion of the costs may have been incurred due to the actions or inactions of my clients’ former lawyer, Don Good, rather than the actions of my client’s themselves. Further, it appears as though MDE’s offer to settle of September 2015 was never communicated…”

   This view is repeated in a joint letter sent to the Court dated April 20, 2016, wherein it is confirmed that:

   “…the Applicants have taken the position that costs in this matter were increased as a result of the conduct of Mr. Good and seek to join him in a separate stage of the cost proceedings…”

   The Applicants’ submissions for costs in the amount of $20,000.00 or alternatively $40,000.00 do not account for this conduct.

   The Applicants’ conduct, through counsel, is seen as having added steps in the proceedings which were not necessary. They became necessary to ensure compliance with the Court-ordered timetable and the hearing of the matter as scheduled on December 17, 2015.

   It is also conduct amounting to denial of what should have been readily admitted. The most significant example is the resistance in confirming that the Applicants were subject to liability for costs in this Appeal. It is unreasonable to expect that the Respondent would proceed without such assurance.

   Such conduct must be reflected in the costs award.

4. The Court is mindful that the Respondent was the successful litigant in this Appeal. The CBO’s decision to issue the building permit was confirmed by the Court. Furthermore, a review of the various steps in these proceedings reveals that most of the results favoured the Respondent and addressed the concerns raised by the Respondent.

   The only exception is the question of the removal of the words “on behalf of Concerned Citizens of South Dundas” which had been added on consent prior to the Respondent’s involvement in this matter. Justice Lafrance-Cardinal had issued an order in accordance with this consent.

5. The Court has considered and reviewed the Bill of Costs filed by the Respondent in support of its position on costs. The Court notes that two lawyers were retained. Mr. Gordon Petch is a very experience counsel. This attracts significant legal fees. Both counsel have spent many hours in this file.

   The Applicants’ new counsel states in his submissions on costs that, thus far, his firm has charged approximately $14,990.58 being 49.4 hours at the rate of $265.00 an hour (2010 call) for all matters including assessing whether to appeal and the costs submissions. While the Court is not questioning the reasonableness of this amount, it is $5,000.00 less than the $20,000.00 costs award argued as being reasonable indemnity for the Respondent for the entirety of the proceedings.

6. These proceedings raised issues which were significant to both the Applicants and the Respondent.

   The Respondent had a vested financial interest in this Appeal. From its perspective, this is a major project involving significant money. This is a multi-million dollars project.

   The Applicants also have an important vested interest in these proceedings. The Court is not oblivious to the impact of this project for these individuals.

   There is no question in the Court’s mind that the Applicants consider themselves aggrieved by the issuance of the building permit.

7. While significant for the parties involved, these proceedings did not raise complex legal issues. It ultimately revolved on whether or not the CBO could reasonably issue the impugned building permit.

8. The Court takes into account the fact that the Respondent twice offered to settle this matter in writing. These were made in a timely manner and are found to have been reasonable.

   These support the notion that the Respondent attempted to resolve this Appeal through reasonable offers.

   The suggestion that the Applicants’ former counsel did not present one of these offers to them is troubling. However, this is an issue between counsel and the Applicants at this point. The record is such that the Applicants did not make any efforts to try and resolve these proceedings.

9. The Respondent’s claim for costs ranging from $199,595.96 to $219,970.44 is seen as unreasonable. When looked at in the totality of the circumstances, it is found to be excessive. It does not reflect the nature of such proceedings.

   The Applicants could not have reasonable foreseen such substantive costs liability by proceeding with an appeal under section 25 of the Building Code Act.

   To grant the amount claimed by the Respondent would be contrary to the fundamental objective of access to justice.

10. The Court grants the Applicants’ request for a three months suspension of the enforcement of the costs award. The Court does so for the following reasons:

    • The amount of the award is significant;
    • The Court was made aware of the Applicants’ intent to proceed with a claim under Rule 57.07 against their original counsel.

Conclusion

[13] The Court therefore makes the following final costs order:

1. The Applicants shall pay the Respondent Morrisburg Dock Expansion Inc. costs in the amount of $121,692.23, which is calculated as follows:

   • $80,000.00 for fees;
   • $10,400.00 for HST;
   • $31,292.23 for disbursements

   TOTAL: $121,692.23

2. This costs award shall be paid on or before September 30, 2016.

3. The Applicants are jointly and severally liable for these costs.

Justice Ronald M. Laliberte Jr.

Released: June 28, 2016

COURT FILE NO.: CV-15-18 DATE: 2016/06/28 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Charles Crober and Christopher Rowntree on behalf of Concerned Citizens of South Dundas Applicants

– and –

The Corporation of the Municipality of South Dundas and The Chief Building Official of the Municipality of South Dundas and Morrisburg Dock Expansion Inc. Respondents

Ruling on costs

Justice Ronald M. Laliberte Jr.

Released: June 28, 2016