COURT FILE NO.: 55171/14 DATE: 2016-06-29 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: KATHLEEN GEORGINA MORASIEWICZ, Claimant AND: THE REGIONAL MUNICIPALITY OF NIAGARA, Respondent
BEFORE: The Honourable Mr. Justice D.A. Broad
COUNSEL: Sean L. Gosnell, for the Claimant Paul M. DeMelo, for the Respondent
HEARD: April 19 & 21, 2016
Costs Endorsement
Background
[1] The matter came before me on April 19, 2016 as an assessment of the claimant’s costs in an expropriation claim against the respondent. The claimant was the owner of a .87 acre parcel on the South Service Road to the QEW in the Town of Grimsby (the “property”). The respondent required the property for the construction of an interchange on the QEW, and in April 2007 it served formal notice of its intention to expropriate the property in accordance with the Expropriations Act R.S.O. 1990, c. E.26 (the “Act”).
[2] The parties entered into an agreement pursuant to S. 30 of the Act dated October 26, 2007 (the “Section 30 Agreement”) by which the claimant agreed to convey the property to the respondent for an agreed price, preserving to the claimant the right to claim additional compensation to be resolved either by further agreement between the parties or by the Ontario Municipal Board (the “OMB”) pursuant to s. 30 of the Act.
[3] The remaining issues in respect of the claimant’s claims for compensation went to a hearing before the OMB. OMB Vice-Chair J. Zuidema released her decision on those issues on October 22, 2010 which did not specifically reference the issue of costs. The claimant brought a motion to Vice-Chair J. Zuidema for an order that the question of costs be referred to the court to be assessed. By decision released January 22, 2014 Vice-Chair Zuidema directed that the costs arising from the expropriation and from her decision be assessed by an Assessment Officer as contemplated under s. 27 of the Section 30 Agreement which provided as follows:
The Region acknowledges its responsibility to reimburse the Owner for its reasonable legal costs incurred before and after the Closing Date. This reimbursement shall occur after the Closing Date, subject to the Owner presenting its claim for reasonable legal costs. In the event that the parties are unable to agree on the costs claimed, the parties consent to this matter being referred to the Ontario Municipal Board, pursuant to Section 30 of the Act and to have an Assessment Officer of the Ontario Superior Court of Justice appointed to assess the reasonable legal costs in accordance with Section 32(1) of the Act.
[4] S. 32(1) of the Expropriations Act provides as follows:
Where the amount to which an owner is entitled upon an expropriation or claim for injurious affection is determined by the Board and the amount awarded by the Board is 85 per cent, or more, of the amount offered by the statutory authority, the Board shall make an order directing the statutory authority to pay the reasonable legal, appraisal and other costs actually incurred by the owner for the purposes of determining the compensation payable, and may fix the costs in a lump sum or may order that the determination of the amount of such costs be referred to an assessment officer who shall assess and allow the costs in accordance with this subsection and the tariffs and rules prescribed under clause 44 (d).
[5] The parties took steps to attempt to arrange an assessment of the claimant’s costs by an assessment officer of the Superior Court of Justice. Neither of the two assessment officers in the Region were available to undertake the assessment hearing, one having conducted an unsuccessful mediation in respect of the matter, and one having the recused himself. It became apparent to the parties that that no alternative assessment officer was available to conduct the assessment. The parties approached the Regional Senior Justice who made unsuccessful inquiries about securing an assessment officer from outside the Region to conduct the assessment. The Regional Senior Justice thereupon made a Superior Court judge available to conduct the assessment. The matter initially came before Justice Gordon who referred the matter back to the Regional Senior Justice. The matter subsequently became before me on April 19, 2016.
[6] At the outset of the hearing, and as a preliminary matter, I invited counsel’s submissions as to whether I had jurisdiction to conduct the assessment in view of section 90 of the Courts of Justice Act, R.S.O. 1990 which provides as follows:
- (1) The Lieutenant Governor in Council, on the recommendation of the Attorney General, may appoint assessment officers. (2) Every master is an assessment officer. (3) Every assessment officer has jurisdiction to assess costs in a proceeding in any court. (4) Where costs of a proceeding before a tribunal other than a court are to be assessed by an assessment officer, (a) the rules of court governing the procedure on an assessment of costs apply with necessary modifications; and (b) an appeal lies to the Superior Court of Justice from a certificate of assessment of the costs if an objection was served in respect of the issue appealed in accordance with the rules of court.
[7] Counsel for the parties advised that neither of them had considered the question of the jurisdiction of a Superior Court Judge to conduct an assessment of costs under s. 32(1) of the Expropriations Act and acknowledged that they had not addressed the question in their discussions with the Regional Senior Justice. Both counsel requested an adjournment of the hearing for two days in order to review the issue of jurisdiction and to prepare submissions on the question. Upon the matter coming back on April 21, 2016 counsel for the claimant advised that he was unable to find any support for the jurisdiction of a Superior Court Judge to conduct the assessment and he therefore withdrew the claimant’s request to have the assessment conducted by a justice of the Superior Court. He indicated that his client would pursue the assessment before an assessment officer of the Court. Counsel for the respondent was unable to offer any submissions in support of my jurisdiction to conduct the assessment and concurred in the withdrawal of the matter before me in favour of having the claimants’ costs assessed by an assessment officer. In light of the withdrawal it was not necessary for me to rule on the question of whether I had jurisdiction to conduct the assessment.
Costs in the Superior Court
(a) Positions of the Parties
[8] The claimant then requested a ruling directing that the costs of the proceedings in the Superior Court, and specifically before the Regional Senior Justice, Justice Gordon and myself, comprise part of the costs of the expropriation to be dealt with by the assessment officer on the ultimate assessment as directed by Vice-Chair Zuidema of the OMB.
[9] The claimant argues that the Expropriations Act establishes an extraordinary costs regime which is fundamentally different than the regime applicable in the civil litigation context. The public policy reason for the extraordinary nature of the costs regime in expropriation matters derives from the forcible taking by the statutory authority of an owner’s property as provided for in the Act. S. 32(1) provides that where the amount determined by the OMB to which an owner is entitled is 85% or more of the amount offered by the statutory authority, the OMB shall make an order that the statutory authority pay the reasonable legal, appraisal and other costs actually incurred by the owner. Pursuant to s. 32(2), where the amount awarded by the OMB is less than 85% of the amount offered by the statutory authority, the OMB may make such order for the payment of costs as it considers appropriate (emphasis added). Regulation 364 under the Act makes it clear that the legal costs are to be assessed on an extraordinary scale, stated to be “as between a solicitor and his or her own client.”
[10] The claimant argues that the policy behind the Expropriations Act and the regulation is to ensure that an owner, whose lands are forcibly taken by expropriation and who is awarded at least 85% of the amount offered by the statutory authority, is to be made whole with respect to his or her legal costs reasonably incurred in respect of the expropriation proceeding. She argues that even though the steps taken in the Superior Court ultimately proved abortive by reason of the lack of jurisdiction, they nevertheless formed part of the expropriation proceeding and were subject to the extraordinary costs regime mandated by the Act and the regulation.
[11] The claimant made reference to the case of Smith v. Alliance Pipeline Ltd. 2011 SCC 7, [2011] 1 S.C.R. 160 (S.C.C.) in support of her position that the costs in the Superior Court should form part of the costs of expropriation and should be reserved to the assessment officer conducting the assessment under s. 32(1) of the Expropriations Act.
[12] In the Smith case an expropriation hearing was held before a Pipeline Arbitration Committee (the “first PAC”) under the National Energy Board Act R.S.C. 1985, c. N-6 (the “NEBA”). Before a decision was rendered by the first PAC, proceedings were brought by the pipeline company in the Alberta Court of Queen’s Bench seeking, among other things, unhindered access to the landowner’s land and an order that the first PAC not render its decision until the Queen’s Bench action was resolved. The court proceeding was ultimately discontinued but in the meantime one of the members of the first PAC was elevated to the bench and the committee’s decision could not be rendered. A second Pipeline Arbitration Committee (the “second PAC”) was appointed and in his amended notice of arbitration the landowner sought compensation for, among other things, his costs before the first PAC. The second PAC awarded him a portion of those costs. On appeal by the pipeline company the Federal Court concluded that the decision of the second PAC was reasonable but on further appeal, the Federal Court of Appeal concluded that the second PAC had erred. The Supreme Court of Canada allowed the appeal and restored the decision of the second PAC to award the landowner a portion of his costs before the first PAC.
[13] Justice Fish, writing for himself and seven other justices made reference to the legislative intent of s. 99(1) of the NEBA, which is to similar effect as s. 32(1) of the Expropriations Act, as being remedial in nature, warranting a broad and liberal interpretation, and conferring an entitlement to full indemnity for all reasonable costs upon a landowner who is awarded at least 85% of the amount of compensation offered by the expropriating party. At para. 60, Fish, J. stated as follows:
First, relying on Ian MacDonald Library Services Ltd. v. P.Z. Resort Systems Inc. (1987), 14 B.C.L.R. (2d) 273 (B.C. C.A.), the respondent argues that Mr. Smith is not entitled to costs before the First Committee because at common law a nullified arbitration proceeding cannot form the basis of an award for costs. This submission rests on the mistaken assumption that the principles governing costs on a consensual arbitration likewise apply under the NEBA. They do not. Parliament has provided for a comprehensive compensatory scheme. The remedial principles of expropriation law — not the arm's length framework of commercial arbitration — govern the operation of the statute. Accordingly, an expropriating company can reasonably be made to bear the costs of procedural delays even where it is not at fault (see, for example, Christian & Missionary Alliance v. Metropolitan Toronto (Municipality) (1973), 3 O.R. (2d) 655 (Ont. H.C.), at p. 657).
[14] The claimant submits that, for the purposes of the matter before this court, the Smith case stands for the proposition that the legislative intent of s. 32(1) of the Expropriations Act is that the claimant is entitled to full indemnity for all of her reasonable costs, including the costs of a proceeding which is a nullity, and that the issue of fault, or lack of fault, on the part of the expropriating authority is irrelevant.
[15] The respondent submits that there should be no costs awarded in respect of the attendances before the RSJ, Justice Gordon and myself, with the result that each side be responsible to bear their own costs. It submits that it would be unfair for it to be found responsible for any costs incurred by the claimant in respect of the abortive steps taken in the Superior Court as it was not at fault for their having been brought. It argues that s. 146 of the Courts of Justice Act (the “CJA”) permits the court to dispose of the issue of costs in a circumstance where there is no express provision that deals with a situation where the court and the parties have incorrectly assumed that the court possessed jurisdiction with the assessment in the first instance. S. 146 of the CJA provides as follows:
Jurisdiction conferred on a court, a judge or a justice of the peace shall, in the absence of express provision for procedures for its exercise in any Act, regulation or rule, be exercised in any manner consistent with the due administration of justice.
[16] The respondent argues that if the Superior Court did not have jurisdiction to conduct an assessment hearing, then the matter before the court is a nullity in that it never could properly be part of the assessment process. The parties were before the court because the court kindly offered to assist, on the assumption that jurisdiction existed, when in fact it did not. The respondent argues that this is not the same situation as that identified in the Smith case. In Smith there was no question that the first PAC had jurisdiction and the hearing before it was properly commenced. It only became a nullity by reason of an intervening judicial appointment of a member of the committee.
(b) Analysis
[17] Section 131 of the Courts of Justice Act provides that, “subject to the provisions of an Act or the rules of court, the costs of and incidental to a proceeding or 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.”
[18] “Proceeding” is not a defined term in the CJA, however, it is defined in Rule 1.03(1) of the Rules of Civil Procedure as “an action or an application”. An “application” is defined as a proceeding commenced by a notice of application and “action” is defined as a proceeding that is not an application and includes a proceeding commenced by a statement of claim, notice of action, counterclaim, crossclaim, or third or subsequent party claim.
[19] Even if the steps taken in the matter before the Regional Senior Justice, Justice Gordon and myself may arguably be considered to be a “proceeding” for the purposes of section 131 of the Courts of Justice Act, it is noteworthy that that section does not require the court to determine the issue of costs in respect of those steps, the jurisdiction to make a costs determination being permissive only and not mandatory.
[20] Given that no authority was offered by counsel to support a Superior Court judge having jurisdiction to conduct an assessment of a claimant’s costs under s. 32(1) of the Expropriations Act, in my view it would be inappropriate for me to make a determination on the question of costs of the steps taken in this court by ordering that each side bear their own costs. It is more appropriate for the question of the costs incurred by the claimant in this court to be determined as part of the assessment of costs by an assessment officer under s. 32(1) of the Act. As part of that determination the assessment officer conducting the assessment will have to make a determination of whether any such costs were reasonably incurred, and if so, whether the amount claimed therefor is reasonable. For this court to make a determination of the question of costs would draw the court into an area in respect of which it arguably has no jurisdiction.
[21] There is no manifest unfairness to the respondent in reserving the question of entitlement of the claimant to her costs in this court to the assessment officer. This was not a case of the claimant forging ahead in this court, in spite of its lack of jurisdiction, over the objection of the respondent. The misapprehension of the court’s jurisdiction was shared by both parties.
[22] In the unique circumstances of this matter I therefore decline to make any determination of the question of costs in respect of the steps taken by the claimant in this court, referring the question of entitlement to, and quantum of those costs, to the assessment officer conducting the assessment of the claimant’s costs under s. 32(1) of the Expropriations Act.