COURT FILE NOS.: 18/16 and 510/14 DATE: 20160927 SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Darcy Gates, Plaintiff/Respondent AND: The Humane Society of canada for the protection of animals and the environment carrying on business as the humane society of canada, Defendant/Appellant
BEFORE: C. Horkins J.
COUNSEL: Elichai Shaffir, for the Plaintiff/Respondent Michael O’Sullivan, acting in person for the Defendant/Appellant
HEARD at Toronto: In Writing
COSTS ENDORSEMENT
INTRODUCTION
[1] In Reasons for Judgment (“Reasons”) released August 24, 2016 (2016 ONSC 5345), I made a series of orders. In particular, I dismissed the appeal of The Humane Society of Canada for the Protection of Animals and the Environment carrying on business as The Humane Society of Canada (“HSC”) from the orders of Deputy Judge McNeely and Deputy Judge Twohig. I also lifted the stay of Mr. Gates’ garnishment and made orders against HSC pursuant to rules 2.1.02(3) and 37.16.
[2] I found that HSC’s appeal of Deputy Judge McNeely’s order was “frivolous and wholly without merit,” and its appeal of Deputy Judge Twohig’s order was “frivolous, vexatious and an abuse of the process of the court.” In particular, I found that HSC’s conduct was “reprehensible and egregious.” HSC’s costs submissions reveal that it continues to engage in this conduct.
[3] Mr. Gates seeks substantial indemnity costs in the amount on $8,554.70 inclusive of fees, disbursements and HST. This amount represents the total of substantial indemnity costs for all motions that are decided in the Reasons. HSC takes the position that it should not be ordered to pay Mr. Gates any costs.
[4] This is a clear case where substantial indemnity costs are justified.
The Legal Framework
[5] Section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 provides the court with discretion to award costs and states:
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.
[6] In addition to this general discretion, an award of costs is governed by rule 49 (in the event of an offer to settle) and rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The court must also be guided by the overriding principle of reasonableness as stated in Boucher v. Public Accountants Council for the Province of Ontario, 71 O.R. (3d) 291, [2004] O.J. No. 2634 (C.A.), at paras. 37-38.
[7] In this case, rule 49 is not engaged as no offers to settle were made. As a result, an offer cannot be relied upon to justify substantial indemnity costs. Absent a rule 49 offer, “[s]olicitor-client costs are generally awarded only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties” (Young v. Young, [1993] 4 S.C.R. 3, at para. 251; see also Davies v. Clarington (Municipality), 2009 ONCA 722, 100 O.R. (3d) 66, at paras. 28 and 40).
[8] Rule 57.01(1) sets out the factors that the court may consider when deciding costs:
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.
Analysis
[9] Mr. Gates brought “a straight forward wrongful dismissal claim in Small Claims Court. It has spun out of control due to HSC’s actions. HSC has repeatedly engaged in conduct that is frivolous and vexatious and an abuse of the court’s process” (Reasons, at para. 5).
[10] The Reasons and the findings of fact that I made justify an order for substantial indemnity costs against HSC. The Reasons detail HSC’s repetitive conduct that I found to be reprehensible and egregious. I do not intend to repeat every incident of this behaviour as it is extensive. I rely on the Reasons that describe HSC’s reprehensible and egregious conduct and highlight the following overview of the conduct (Reasons, at paras. 80, 82, 83, 84, 86, 87, 90, 92).
[11] There was “no rational basis for HSC’s appeal of Deputy Judge McNeely’s order.” This order corrected a misnomer (i.e. the correct name of HSC). The Divisional Court and the Court of Appeal had also issued orders correcting the misnomer; these orders were not appealed. HSC failed to raise a ground of appeal that made any sense whatsoever. Instead, HSC raised a ground of appeal that highlighted “why its actions are frivolous and vexatious and an abuse of the court’s process.” The “appeal [was] frivolous and wholly without merit” (Reasons, at paras. 66, 67, 72).
[12] HSC’s notice of appeal of Deputy Judge Twohig’s order included “allegations that [were] misleading, false and/or irrelevant to the matter on appeal” and was “also filled with serious unjustified and unfounded accusations against Mr. Gates and his counsel.” (Reasons, at paras. 82 and 84).
[13] The unfounded accusations against Mr. Gates and his counsel are serious. HSC continues to make these false allegations in its costs submissions. HSC has demonstrated that it chooses to ignore the clear direction of this court that allegations of criminal conduct against Mr. Gates and his counsel constitute reprehensible and egregious behaviour.
[14] As noted in paras. 34-35 of the Reasons, the Divisional Court warned HSC about its behaviour on September 25, 2013, in the following excerpt from that Court’s costs decision:
Allegations of criminal misconduct unsupported by any evidence, and the repeated failure to comply with the Rules of Civil Procedure amount in this case to reprehensible and egregious behaviour, which warrants an order for payment of elevated costs. [HSC] is not entitled to use its status as a charitable corporation to shield its misconduct to the prejudice of [Mr. Gates].
[Emphasis added]
[15] HSC ignored the Divisional Court order and continued to make unsupported and false allegations of criminal conduct against Mr. Gates and his counsel. The Reasons provide multiple examples of this conduct.
[16] As stated in para. 122 of the Reasons, “HSC’s reprehensible and egregious conduct must stop.” HSC ignored the court. It continues to make false criminal and otherwise serious allegations against Mr. Gates and his counsel in its costs submissions (i.e. that Mr. Gates committed an act of workplace violence and perjury, and that Mr. Gates’ counsel was in contempt of court orders and committed perjury). HSC’s conduct fully justifies a substantial indemnity costs award.
[17] Mr. Gates’ request for substantial indemnity costs of $8,554.70 covers costs for all matters that the court heard on June 9, 2016 and the Rule 2.1.02 motion that the court initiated.
[18] With the exception of the motion to lift the stay of the garnishment, Mr. Gates was successful. Counsel’s work was fairly shared with a law clerk. The billing rates are reasonable: $261 for counsel and $145 for the law clerk. In total, counsel and the law clerk docketed 34.1 hours.
[19] The Reasons demonstrate the protracted history of this litigation. Ordinarily, motions dealing with appeals from a Small Claims Court order would not involve 34.1 hours. This, however, is not typical litigation. This is apparent in the history reviewed in the Reasons. It is also apparent when one looks at the growing liability of HSC to Mr. Gates. In December 2015, Mr. Gates legally garnished $33,675.37 from HSC’s account. This covered the Small Claims Court judgment of 16,339.38 and an additional amount of $17,335.99 (HSC’s liability for costs orders and perhaps interest on the judgment).
[20] HSC’s costs submissions for the most part seek to reargue the appeals and motions it has lost, and continue the false allegations against Mr. Gates and his counsel.
[21] HSC argues that the court should not grant Mr. Gates and his counsel costs because it will reward counsel for his mistake in misnaming HSC. I reject this argument. The courts that issued the orders correcting the misnomer have already dealt with the costs from those various orders. This court is deciding costs flowing from the motions that were before the court. The court dismissed HSC’s appeal of Deputy Judge McNeely’s order (that corrected the misnomer). This appeal was dismissed because it was frivolous, wholly without merit and an abuse of the court’s process (Reasons, at paras. 58-72). Given the result, Mr. Gates is entitled to costs.
[22] HSC states that the court should not award costs to Mr. Gates because it would use “charitable donations intended to help animals.” HSC suggests that it must “adequately protect those donations and see that they are spent on animals,” and that a costs order against it causes “hardship” to the animals that depend on the HSC. As the Divisional Court stated in the September 25, 2013 costs decision, HSC “is not entitled to use its status as a charitable corporation to shield its misconduct to the prejudice of [Mr. Gates]” (Reasons, at para. 35).
[23] HSC has provided its own Bill of Costs. It did not have counsel. The costs submissions do not explain why HSC has included its own Bill of Costs. If HSC is seeking costs there is obviously no basis whatsoever for awarding them to HSC, given the Reasons. The Bill of Costs reveals the time that Mr. O’Sullivan spent on the various motions before the court. It also includes time incurred by a person named Ian Strazdins. In total, they spent 60 hours. This is significantly more than the 34.1 hours in Mr. Gates’ counsel’s Bill of Costs.
[24] The time that the unsuccessful party incurs is relevant to “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” (rule 57.01(1)(0.b)). The 60 hours in HSC’s Bill of Costs demonstrates the reasonableness of the hours spent by Mr. Gates’ counsel.
[25] Based on the above analysis, I conclude that $8,000 all-inclusive is a very fair and reasonable amount to fix for substantial indemnity costs, given HSC’s conduct. I have reduced the requested costs by $500 to reflect the fact that Mr. Gates’ motion to lift the stay of garnishment was dismissed. I recognize that that the stay was ultimately lifted, but this arose as a result of the court’s rule 2.1.02 motion.
[26] HSC issued appeals as a “vehicle to stop a legal garnishment” (Reasons, at para. 121). It has ignored court warnings regarding its conduct and has made numerous false and misleading statements (Reasons para. 121). As a self-represented litigant, HSC has filed appeals and motions that have no merit whatsoever. HSC’s unreasonable, reprehensible and egregious conduct has forced Mr. Gates to incur significant legal costs. HSC has abused the limited resources of the court. As other courts have stated, such conduct “will meet the hammer of a cost's [sic] award” (De Cruz-Lee v. Lee, 2015 ONSC 2012, at para. 29; Irmya v. Mijovick, 2016 ONSC 5276, at para. 6).
[27] In conclusion, HSC is ordered to pay Mr. Gates his costs of all motions and appeals heard on June 9, 2016 as well as the rule 2.1.02 motion, fixed at $8,000 payable in 30 days.
[28] Mr. Gates shall prepare the draft costs order and deliver it to Justice C. Horkins for signing. HSC’s approval of the draft order is waived.
C. Horkins J.