CITATION: Gammie v. Jordan, 2017 ONSC 124
COURT FILE NO.: Walkerton 106/14
DATE: 2017-01-05
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
CRAIG GAMMIE
Applicant
- and -
DOUG JORDAN
Respondent
COUNSEL:
Craig Gammie, Self-represented
Leigh Fishleigh, for the Respondent
HEARD: July 21, 2016, at Owen Sound, Ontario
BEFORE: Price J.
Reasons For Order
NATURE OF MOTION
[1] Craig Gammie (“Mr. Gammie”) was a member of a ratepayers association known as the Amabel Property Owners Association (“APOA”). Amabel was a township in Ontario that in 1999 became part of the town of South Bruce Peninsula. Because of conflict within its Board, the APOA was inactive for two years or more, neither taking any action, nor collecting annual dues from its members, nor electing members to its board of directors, all of which its Constitution and By-laws required to be done on an annual basis.
[2] When Doug Jordan (“Mr. Jordan”) formed a ratepayers association for Sauble Beach, which comprises half of the former Amabel Township, the Sauble Beach association began welcoming members from beyond Sauble Beach, including from the former Amabel Township. The Sauble Beach association then proposed to adopt the name Amabel Property Owners Association (APOA). Some of former APOA board members voted to cease the old association’s operations and agreed to permit the new association to carry on their activities and adopt their name. Mr. Gammie, who disagreed with the decision and wanted to continue APOA with himself as President, brought the present application to prevent the newly incorporated APOA from using the former Association’s name.
[3] Mr. Gammie argues that the Corporations Act, R.S.O. 1990, C. c-38 should be construed as preventing the newly incorporation association from using the name of the former association, on the basis that doing so would likely deceive the public, and cause them to confuse the old association with the new one. For the reasons that follow, Mr. Gammie’s application will be dismissed. The old association ceased to exist during the prolonged period when it was inactive and failed to take the steps which its Constitution and By-laws required. It therefore had no further use for the name, and its former President and signing officer, who became trustee of its name and property, was entitled to transfer them to the newly incorporated Association in trust for the property owners of former Amabel Township.
BACKGROUND FACTS
The Amabel Property Owners Association (APOA)
[4] In 1999, a number of townships, including Amabel Township and several nearby towns and villages, were amalgamated into the Town of South Bruce Peninsula. Sauble Beach was the main community in Amabel Township. The Amabel Property Owners Association (APOA) was an unincorporated association of ratepayers in Amabel Township.
[5] Craig Gammie, who became a director of APOA in about 2004, states in an affidavit sworn June 8, 2015:
The association was formed in or around the 1950’s or 1960’s, but the name may have changed a bit since the start. I believe that the Amabel Property Owners Association has been in existence since at least 1990 under that name.
[6] APOA’s board of directors met several times between 2000 and 2008, and successfully opposed proposals by the Municipal Council of South Bruce Peninsula to build a communal sewage system for Sauble Beach, and a communal water system for Sauble Beach and surrounding areas. In 2008, APOA held approximately $13,000, received either as membership dues or as subscriptions for projects. This money has not been spent.
[7] On September 20, 2008, Mr. Gammie’s brother, Robert Douglas Gammie (“Doug Gammie”), was elected President of the APOA by the only member who attended the Annual Meeting. In 2008 and early 2009, there was infighting within the APOA board of directors. In particular:
a) Two of the ten board members complained about a newsletter that Doug Gammie had written and a letter to the Municipal Council which he had drafted. Those members regarded the letter as incorrect and insulting and threatened to resign if Doug Gammie sent it. They called him a “weekend visitor” to the community.
b) Doug Gammie told the two members that he would not tolerate “permanent resident snobbery” and said “It seems I will meet your condition to resign”.
c) Another of the board members wrote to the board, stating that he fully supported the departing board members.
d) Another of the board members wrote to the board, referring to Doug Gammie as a “backstabber”.
[8] While one of the dissident board members called a meeting for March 15, 2009, the meeting was deferred until April 14, 2009, and ended up not being held. There followed a period of two years or more when there was no activity by the board or the Association. No membership dues were collected during that period, and no members were elected to the board.
The Sauble Beach Residential Property Owners Association (SBRPOA)
[9] On May 10, 1978, the Sauble Beach Property Owners Association (SBPOA) registered its name with the Government of Ontario. One of its directors was Ernest Powers. The SBPOA was inactive for many years.
[10] In 2011, Janice Jackson, a member of the Municipal Council of the Town of South Bruce Peninsula, spoke with Mr. Jordan. She noted that native land claims were being made that could affect the property owners of Sauble Beach. She suggested that the property owners form an association.
[11] Mr. Jordan organized a number of volunteers, who incorporated the Sauble Beach Residents Association (SBRA) on June 5, 2013, and formed its first executive. Mr. Jordan became one of its first directors and its President.
[12] On July 14, 2013, Mr. Jordan, obtained the signed permission of Mr. Powers, formerly a director of the Sauble Beach Property Owners Association, to allow the newly formed Sauble Beach Residential Property Owners Association to use its name, ‘The Sauble Beach Property Owners Association’, or any derivative of that name. The document that Mr. Powers signed stated:
I Ernest Powers hereby grant permission for the officers of the NEW “Sauble Beach Residential Property Owners Association (formed summer 2014) to cease any and/or all old officers and directors of “The Sauble Beach Property Owners Association”, registered on or about May 10, 1978, hereafter known as the OLD association.
This document also grants permission for the NEW officers to add themselves and any new officers/directors using the name “The Sauble Beach Property Owners Association” or any derivative of that name that was or may have been used, as the association performed business through the years.
[13] On August 1, 2013, The Sauble Beach Property Owners Association (SBPOA) officially changed its name to the Sauble Beach Residential Property Owners Association (SBRPOA) by applying to the Ontario Ministry of Government Services for Supplementary Letters Patents, pursuant to a resolution confirmed by members of the Association on June 27, 2013.
The dispute between members of the two Associations
[14] On September 18, 2012, Mr. Jordan wrote to Mr. Gammie, introducing himself as the current President of the newly formed Sauble Beach Residential Property Owners Association. In his letter, he referred to the Amabel Property Owners Association as “the last association”. Mr. Gammie replied to Mr. Jordan’s letter, stating that the APOA had never been wound up.
[15] Several past members of the APOA joined the SBRPOA, and two of them joined the SBRPOA’s board of directors. It was Mr. Jordan’s view that there was no longer a lawful board of directors of the APOA, as there had been no meetings of the executive and the association had not conducted any business, such as renewal of annual memberships, since approximately April 2009.
[16] On September 21, 2013, the SBRPOA’s board of directors met and discussed “monies held by the previous APOA”. The question was raised as to whether those funds could be transferred to the SBRPOA. The Board authorized one of its members, John Carter, to attempt to contact “the previous officers” of APOA for clarification.
[17] At the same meeting, SBRPOA’s board also discussed the possibility of shortening the name of that association by adopting the name formerly used by the APOA. The Minutes of the meeting state:
Along that line, discussion was held regarding the possibility of shortening, changing, or adapting our current name, as several of us were approached at the barbecue and have been separately as well, asking if we were a reorganization of the old property owners’ organization. There appears to be some confusion over this issue as there has been more than one organization in the past. Two of the board members used to belong to the APOA and are of the impression that the organization simply ceased to be in the last several years. We have already consolidated one old association name into our organization and will pursue avenues to do the same with APOA. Contact of previous officers will be attempted to clarify this. We may wish to expand boundaries at a future date, possibly to the ‘Amabel Township’ geographic footprint, and that past organization’s name appears to be most familiar with the public. [Emphasis added]
[18] The APOA board of directors did not meet from April 14, 2009 until 2014. Mr. Gammie called for a meeting of the APOA board to take place May 3, 2014. On that date, five of the seven APOA board members from its last (2008-2009) term met. They discussed their desire to discontinue operating as an association and discussed the new SBRPOA as their possible successor. One of the board members made a motion that the APOA be permanently dismantled, effective immediately. The motion was passed by 4 votes to 3.
[19] Mr. Gammie complains that the motion passed by the APOA board of directors on May 3, 2014 was unlawful, as there was no prior notice that it would be made. Mr. Gammie asserts that twice during the meeting on May 3, 2014, he tried to pay his membership dues to the Treasurer and was refused. The third time, he paid his membership dues to himself, and declared that he was a member of the restored association. He then declared that APOA had at least one member, and was therefore an ongoing organization.
[20] Following the meeting on May 3, 2014, Craig Gammie and another APOA board member, who had not attended the meeting on that date, opened a new bank account in the name of APOA.
[21] At a community meeting on July 5, 2014, organized to discuss a First Nations land claim to the beach at Sauble Beach, Mr. Gammie and his wife set up a table with information about the APOA, sold APOA memberships, and issued APOA membership cards. When Mr. Jordan stated to Mr. Gammie’s wife that he thought the APOA was defunct, Mr. Gammie stepped up and stated that it was not defunct.
[22] Mr. Gammie states that on July 10, 2014, there was a further meeting of the APOA board of directors at which the May 3 “dissolution” of the Association was reversed. At a meeting on July 12, 2014, attended by Mr. Jordan and Doug Gammie, Craig Gammie asserted that on May 3, 2014, the APOA had improperly transferred the approximately $13,000 which the APOA held in 2009.
[23] Craig Gammie later called a general meeting of the APOA, to take place August 23, 2014, to which “APOA members and potential members” were invited. Notices of the meeting, according to Mr. Gammie, were “posted broadly”. Those who attended the meeting on that date elected Craig Gammie and four others as directors. Mr. Jordan did not attend the August 23rd meeting.
[24] On August 27, 2014 the SBRPOA incorporated the “Amabel Property Owners Association” by Letters Patent from the Ontario Ministry of Government Services. The 6 first directors of the new APOA were identical to the 6 first directors of the SBPROA , with the exception that James Thomas Darby, a first director of the SBRPOA, who was replaced by Paul Bernard McCulloch in the incorporated APOA.
[25] At a public meeting that the SBRPOA held on August 29, 2014 to discuss the First Nations land claim in relation to Sauble Beach, Mr. Gammie set up a table outside the building where the meeting took place, with a sign that said “Amabel Property Owners Association”. Mr. Jordan asked Mr. Gammie what he was doing and Mr. Gammie replied that he was signing up members to APOA. Mr. Jordan asked Mr. Gammie what he was doing with the money he collected for memberships and added that the APOA was “not registered”, and that what Mr. Gammie was doing was illegal.
[26] On October 4, 2014, Mr. Gammie was informed that the SBRPOA website had endorsed several municipal election candidates. Mr. Gammie, who was a member of the Municipal Council for the Town of Bruce Peninsula, was not among those endorsed on the website. He asked Mr. Jordan for a meeting to discuss the Association’s failure to endorse him. A meeting was held on October 11, 2014, at the Sauble Beach home of a SBRPOA director. Later the same day, Mr. Jordan advised Mr. Gammie that the SBRPOA had “begrudgingly decided that we will add Craig Gammie’s name to the recommended slate of candidates posted on our webside.” He added:
We do this solely for the benefit of the residents of TSBP [Town of South Bruce Peninsula] and Janice Jackson’s ability to run [council] as mayor as we understand Mr. Gammie’s ability to back her position in council. This action is taken in spite of Mr. Gammie’s history within the town which may cause us members and the disregard he has shown toward [yo]ur Association over time.
[27] On the same day, Mr. Jordan wrote an e-mail to Craig Gammie, asserting that the SBRPOA had the sole right to use the name Amabel Property Owners Association from that day forward.
[28] On November 24, 2014, Mr. Gammie commenced the present proceeding. He seeks an order requiring Mr. Jordan to change the name of the corporation, Amabel Property Owners Association to one that “is distinct from the (unincorporated) association called Amabel Property Owners Association and that is acceptable to the Applicant.”
[29] In a statement signed September 27, 2015, Doug Gammie, in his capacity as the last serving President of the APOA, wrote the following to Mr. Jordan, President of the SBRPOA :
In my capacity as President for the 2008-2009 annual term (last serving president) on the board of directors of the Amabel Property Owners Association, I assign all the rights and responsibility for the name Amabel Property Owners Association to the newly incorporated Suable Beach Residential Property Owners Association.
The former Amabel Property Owners Association has not conducted any business or taken any membership dues (new or recurring) since approximately 2009.
On May 3, 2014, the former Amabel Property Owners Association executive, met at the Sauble library. Present at that meeting were: Doug Gammie, Orma Lyttle, Rick Lyttle, Pat Varley, Gerry Varley, Ken Graham, Craig Gammie.
In our former bylaws, the number of directors required was 10 and a quorum was 5. We had seven former board members present at the June (sic) 2014 meeting. All eight of the former board members who had any interest were notified in advance of the date and location of this meeting. There was no membership roll, it had not existed for several years as of the June date. The meeting was conducted informally since there were no elected officers or members. Since support for shutting the organization down was demonstrated it was decided that we would vote on it. One person, Craig Gammie, objected to the vote but all others present wished to proceed. Five of the seven former board members present voted to close the Amabel Property Owners Association down and cease operations. Those former board members in favour of shutting it down included: Orma Lyttle, Rick Lyttle, Pat Varley, Gerry Varley, Ken Graham.
ISSUES
[30] The court is required to determine whether the Sauble Beach Residential Property Owners Association (SBRPOA), may continue to use the name Amabel Property Owners Association (APOA), which they incorporated on August 27, 2014.
PARTIES’ POSITIONS
[31] Mr. Gammie argues that the SBRPOA’s use of the name APOA will cause the public to confuse that entity with the former APOA. He asserts that he revived the former APOA before the new APOA was incorporated. Mr. Gammie argues that the permission given by a number of the former APOA’s board members to the SBRPOA and Doug Jordan a year after the latter incorporated the new APOA is invalid. Further, Mr. Gammie submits that Mr. Jordan incorporated the APOA name for an improper purpose, namely, to harm the advocacy efforts of the legitimate APOA members and to get control of their assets. Mr. Gammie seeks an order directing Mr. Jordan to change the name of the incorporated APOA to something that will not deceive the public, and that is acceptable to Mr. Gammie.
[32] Mr. Jordan argues that the incorporated APOA will cause no confusion to the public because the former APOA has ceased to exist. It was not active from April 14, 2009, when its last board meeting was held amidst serious controversy and animosity, until September 2013. Further, Mr. Jordan states that on May 3, 2014, the majority of the APOA’s last serving board members voted to formally cease the operations of the Association.
[33] Mr. Jordan argues that the SBRPOA, through its Board of Directors, incorporated the APOA on August 27, 2014, with objects similar to those of the former APOA, and for the benefit of the same community of property owners. He argues that Mr. Gammie convened what purported to be a meeting of the APOA board on July 12, 2014, in order to get access to the former Association’s funds that were still controlled by the dissolved APOA’s executive. He argues that the decision made at that meeting, purporting to reverse the dissolution of the former Association, was invalid. Because the $13,000 was paid to the original APOA only for some specific cause in the Sauble Beach area, and that cause can only be implemented by the SBRPOA, Mr. Jordan argues that the SBRPOA can properly operate under the name APOA (incorporated) and use the funds for the purpose for which they were intended. Mr. Jordan therefore submits that Mr. Gammie’s application has no merit and should be dismissed.
ANALYSIS AND EVIDENCE
Legislative framework
[34] The Corporations Act provides, in part:
13(1) A corporation shall not be given a name,
(a) That is the same as or similar to the name of a known corporation, association, partnership, individual, or business, if its use would be likely to deceive, except where the corporation, association, partnership, individual or person consents in writing that its, his or her name in whole or in part be granted, and, if required by the Minister,
(ii) In the case of an association, partnership or individual, undertakes to cease to carry on its, his or her business or activities, or change its, his or her name, within six months after the incorporation of the new corporation.
(3) `A person who feels aggrieved as a result of the giving of a name under subsection (1) or the changing or refusing to change a name under subsection (2) may, upon at least seven days’ notice to the Minister and to such other persons as the court directs, apply to the court for a review of the matter, and the court may make an order changing the name of the corporation to such name as it considers proper or may dismiss the application.[^1] [Emphasis added]
Jurisprudence
[35] In Unity Insurance Brokers (Windsor) Ltd. v. Unity Realty & Insurance Co., in 2005,[^2] the Divisional Court considered the meaning of the phrase “would be likely to deceive”. The Divisional Court noted that section 2 of Ontario Regulation 62,[^3] made under the Business Corporations Act of Ontario, provides:
2(1) “Name” when used in the expression “if the use of that name would be likely to deceive” used in clause 9(1)(b) of the Act, includes,
(a) A name that would lead to the inference that the business or activities carried on or intended to be carried on by the corporation under the proposed name and the business or activities carried on by any other person are one business or one activity, whether or not the nature of the business or activity of each is generally the same;
(b) A name that could lead to the inference that the corporation bearing the name or proposed name is or would be associated or affiliated with a person if the corporation and such person are not or will not be associated or affiliated; or
(c) A name whose similarity to the name of a person would lead someone who has an interest in dealing with that person, to deal with the corporation bearing the name in the mistaken belief that they are dealing with the person. [Emphasis added]
[36] The Divisional Court cited with approval the words of Schatz J. in Re Cole’s Sporting Goods Ltd. and C. Cole & Co. Ltd. and Coles Book Stores Ltd., in 1965:
… it is not the duty of the Court to make any order for the sole purpose of removing a grievance in so far as it affects the person complaining, but the Court must act for the benefit of the public who are likely to be deceived, the grievance of a party being an entirely secondary result. Under the Act this is a matter respecting the public primarily, i.e., if the public likely to be deceived, and therefore in my opinion the principles of a passing-off action are not applicable…[^4]
Applying the legislative framework to the present case
[37] Mr. Jordan submits that the use of the name “Amabel Property Owners Association” (APOA) is not likely to deceive the public because the former APOA ceased to exist before August 27, 2014, when he and other members of the SBRPOA incorporated the name APOA. He makes this argument on the following grounds:
a) The former APOA ceased to carry on activities, including collecting membership dues and electing board members, for four years prior to the incorporation of APOA Inc.
b) The former APOA board voted on May 3, 2014, to dissolve the Association, and the subsequent decision made at a meeting convened by Craig Gammie on July 10, 2014, which purported to reverse the May 3 dissolution, was invalid.
c) The former APOA board, in its decision to dissolve, gave its permission to the SBRPOA to use its name and transferred the funds from its treasury to the SBRPOA.
[38] Mr. Gammie argues that the use of the name APOA by the incorporated entity will cause confusion to the public because the former APOA was still active when the new APOA was incorporated. He makes this argument on the following grounds:
a) The former APOA board, of which he was a member, never formally wound up the Association;
b) The APOA last-serving board members’ decision on May 3, 2014 to dissolve the Association was invalid, as no notice was given prior to the meeting that the motion to dissolve would be made.
c) Mr. Gammie paid his membership dues to himself, as Secretary of the APOA, on May 3, 2014, after the Treasurer twice refused to accept them. He was therefore a member in good standing and entitled to convene the meeting on July 10, 2014, which reversed the dissolution of the Association, and he was properly installed as President of the Association at the General Meeting which he convened on August 23, 2014.
Did the APOA cease to exist before APOA Inc. was incorporated?
(i) The nature of an incorporated association
[39] The former APOA was an unincorporated association. D.L. Bourgeois’s The Law of Charitable and Not-for-Profit Organizations, describes the nature of an unincorporated organization in the following terms:
An unincorporated organization is, essentially, an agreement among a number of persons which articulates their common purpose, establishes an organization to achieve that common purpose and sets out how that organization is to be operated to achieve that purpose. The relationship among the persons is contractual in nature…The constituting documents are contractual in nature and may vary by name and content…Because the relationship is contractual in nature in an unincorporated association, without an amendment provision all members must agree to the change in terms of the contract.[^5] [Emphasis added]
(ii) The primacy of an association’s constitution and by-laws
[40] Where an unincorporated association’s constitution or by-laws prescribe a means of dissolution or merger, the court will oblige its members to follow them. Evans J.A., speaking for the majority of the Court of Appeal in Astgen et al. v. Smith et al., in 1969, delineated the functions of an association’s constitution and by-laws in governing relations among members of the association:
Mine Mill is not a corporation, individual or partnership, and is accordingly not a legal entity; it is an unincorporated group or association of workmen who have banded together to promote certain objectives for their mutual benefit and advantage and in law nothing is recognizable other than the totality of members related one to another by contract. The objects and purposes of the association are spelled out in the memorandum of association usually referred to as the "constitution"; the by-laws or rules provide the machinery for the proper carrying out of activities intended to advance the objectives and purposes of the voluntary association. Each member of Mine Mill, upon being granted membership, subscribed to those purposes and objects and in so doing entered into a contractual relationship with every other member of Mine Mill. Rand, J., in Orchard et al. v. Tunney, 1957 CanLII 57 (SCC), [1957] S.C.R. 436 at p. 445, 8 D.L.R. (2d) 273 at p. 281, stated:
... each member commits himself to a group on a foundation of specific terms governing individual and collective action ... and made on both sides with the intent that the rules shall bind them in their relations to each other.
I adopt also the proposition stated by Thompson, J., in Bimson v. Johnston et al., 1957 CanLII 131 (ON SC), [1957] O.R. 519 at p. 530, 10 D.L.R. (2d) 11 at p. 22, which was affirmed on appeal 1958 CanLII 345 (ON CA), [1958] O.W.N. 217, 12 D.L.R. (2d) 379:
... that a contract is made by a member when he joins the union, the terms and conditions of which are provided by the union's constitution and by-laws ... The contract is not a contract with the union or the association as such, which is devoid of the power to contract, but rather the contractual rights of a member are with all other members thereof.
The contract of association is not between the member and some undefined entity which lacks the capacity to contract; it is a complex of contracts between each member and every other member of the union. These are individual contracts impressed with rights and obligations which cannot be destroyed in the absence of the specific consent of each person whose rights would be affected thereby.[^6]
(iii) The applicable terms of APOA’s constitution
[41] The parties tendered a document which, though unsigned, they agree is the constitution of the former APOA. Craig Gammie, in his affidavit sworn June 8, 2015, states:
- Exhibit A is the constitution of the APOA. This one is unsigned. I believe there is a signed version somewhere. I believe that I signed it.
[42] Doug Gammie, in his affidavit sworn August 26, 2015, tendered by Doug Jordan, states, in paragraph 5:
Attached and marked as Exhibit “A” is a copy of the Amabel Property Owners Association Constitution and By-laws.
[43] There is no provision in APOA’s Constitution and By-laws for dissolving the Association. The Constitution and By-laws contain the following amendment provisions:
Article X Amendments and Ratification
• The Constitution must be voted on, signed, and approved by the Board of Directors. (must be a recorded vote)
• This document must also be read, voted on and approved at the Annual Meeting, by a simple majority of the membership.
• Amendment to the Constitution must be submitted in writing at a regular meeting of the Board of Directors. Said amendment(s) will be voted on at a subsequent meeting and read again at the next Annual Meeting to complete the ratification.
(iv) The requirement for unanimity in the absence of a provision governing dissolution in the constitution
[44] Where an Association’s constitution does not contain a provision governing dissolution, the members in good standing of the Association must make such decisions unanimously, as they concern the continued existence or identity of the Association or of its fundamental objects. In Astgen et al. v. Smith et al., in 1969, the majority of the Court of Appeal upheld the decision of the motions judge who held that, where a local trade union’s constitution was silent as to the manner of its dissolution or merger, a decision of the majority to change its affiliation from the International Union of Mine, Mill, and Smelter Workers to the United Steelworkers of America was invalid.[^7]
[45] The Court of Appeal in Organization of Veterans of the Polish Second Corps of the Eighth Army v. Army, Navy & Air Force Veterans in Canada et al., in 1978, reviewed the jurisprudence governing how an unincorporated association can dissolve and how its property can devolve to another. In that case, the Court of Appeal dismissed an appeal from Labrosse J., then a trial judge, who vested the property of an unincorporated local unit of a veterans' organization in the unit’s successor, and not in its national parent organization, after the parent organization cancelled the local unit’s charter. Blair J.A. stated:
Unincorporated associations are based on contract which binds the members together for declared common purposes and governs their relationship with each other, as Rand, J., said in Orchard et al. v. Tunney, supra, at p. 445 S.C.R., p. 281 D.L.R.:
Apart, then, from statute, that a union is held together by contractual bonds seems obvious; each member commits himself to a group on a foundation of specific terms governing individual and collective action, a commitment today almost obligatory, and made on both sides with the intent that the rules shall bind them in their relations to each other. That means that each is bound to all the others jointly.
The terms of the contract are expressed in or implied from the constitution and rules of the association which it is said:
"The courts must consider ... as they would consider any other contract": Baker v. Jones et al., [1954] 2 All E.R. 553, per Lynskey, J., at p. 558.
The contractual relationship between the members prescribes both the ambit of the activities of the association and the procedures to be followed in undertaking them. Even where the rules are silent, it is agreed that the day-to-day activities falling within its objects and purposes may be authorized by a majority vote of the members. Where, however, the activity is outside the scope of the ordinary purposes and objects of the association, and is not provided for in the rules, it cannot be approved by a majority and requires unanimous approval of all members. In Re Int'l Nickel Co. of Canada, Ltd., 1949 CanLII 129 (ON SC), [1949] O.R. 765 at p. 780, [1950] 1 D.L.R. 381 at pp. 395-6, Gale, J. (as he then was), said:
While it is true that in all internal affairs, that is, in action taken within the boundaries of the rules and regulations which govern the conduct of an association, and always subject to those rules and regulations, a majority of the members can control and guide the fate of the minority under the authorities, that principle does not apply where the group or association is going outside of its powers by seeking to bring an end to its existence or to sever the cord through which it derives its being.
In the absence of provisions in the rules, unanimity is required where organic and fundamental changes are proposed. Examples of such changes include amendments to the constitution: Astgen et al. v. Smith et al., 1969 CanLII 488 (ON CA), [1970] 1 O.R. 129, 7 D.L.R. (3d) 657; Lloyd, Law Relating to Unincorporated Associations (1938), at p. 177; or dissolution of the association: Lloyd, supra, at p. 206; MacKenzie et al. v. Somers et al., 1953 CanLII 328 (NS SC), [1954] 1 D.L.R. 421 (N.S.S.C.). The Courts have been particularly strict, in the absence of rules permitting majority action, in requiring unanimity where the property rights of members are affected either by proposals of a majority to dispose of the association's property or to secede from a parent organization.
The interests of the members in the association or club property is a matter which is primarily to be ascertained by reference to the rules of the club: Josling and Alexander, Law of Clubs, 3rd ed. (1975), at p. 8. Unless the constitution provides otherwise, the rule is that the legal title to common property is vested in the members of the association for the time being: Massie & Renwick Ltd. v. Underwriters' Survey Bureau, Ltd. et al., 1940 CanLII 1 (SCC), [1940] S.C.R. 218 at p. 228, [1940] 1 D.L.R. 625 at p. 631, 7 I.L.R. 19, per Duff, C.J.; 19 Hals., 4th ed., p. 78, para. 135.
A member's interest in the association's property continues only so long as he remains a member and, subject to any rules of the society to the contrary, it terminates if he ceases to be a member. Only members in good standing at the time of dissolution are entitled to share in the assets. Lloyd, supra, at p. 175; Abbatt et al. v. Treasury Solicitor et al., [1969] 1 W.W.R. 1575 at p. 1583 [per Lord Denning, M.R.]; Josling and Alexander, supra, p. 8.
The consequences of the special property rights of members are stated by Lloyd, supra, at p. 177, as follows:
The right of every member in the society's property is, as has been seen, subject to the similar rights enjoyed by every other member. It follows, therefore, that no alienation of the property can take place, apart from special provisions in the rules, without the concurrence, express or implied, of every member. Just as a majority of members has no inherent right to expel another member from the society, so a majority has equally no inherent power of alienating the common property.
Because of the peculiar nature of the interest of the members of an unincorporated association in the property of the association the Courts have been zealous to protect that interest where factions develop and the fellowship of the association is broken. They have been particularly concerned to do this where the fragmented association has split into a disloyal faction, which has gone its separate way and attempted to take the association's property with it, and an ongoing loyal group of adherents seeking to preserve the property and the fellowship of the original association. The tempestuous history of religious denominations, fraternal societies and trade unions affords many examples of local congregations or units seeking to break away from the parent body either to affiliate with another organization or achieve independence. It has been held many times that, unless authorized by the organization's constitution, a mere majority of members cannot cause property to be diverted to another association having different objects: Vick v. Toivonen (1913), 1913 CanLII 605 (ON CA), 4 O.W.N. 1542, 12 D.L.R. 299. In that case, Maclaren, J.A., said at p. 1543 O.W.N., p. 301 D.L.R.:
It is a well-settled principle of law that the property of a voluntary society like this cannot be diverted by a majority of its members from the purposes for which it was given by those who contributed to it, or devoted to purposes that are alien to or in conflict with the fundamental rules laid down by the society ...[^8] [Emphasis added]
[46] The majority in Astgen et al. v. Smith et al., supra, citing Gale J., as he then was, in Re International Nickel Co. of Canada, Ltd.; Shedden v. Kopinak, held that an association continues to be a viable entity for so long as it has enough members to entitle it to continue. So long as it is viable, a “dissident” majority is precluded from appropriating the name of the association. Justice Gale, in Re International Nickel Co. of Canada, Ltd., stated:
Viewing the matter in that light it becomes clear that since the Local, and not its membership, was the party certified as the collective bargaining agency under the then existing legislation, and was the party to the agreement, it is entitled to continue as such while composed of persons empowered to carry out the enterprise pursuant to the constitution, rules and regulations of the International Union of Mine, Mill and Smelter Workers.[^9] [Emphasis added]
[47] There being no provision in the APOA’s Constitution and By-laws for dissolution or revival of the Association, such decisions required the unanimous approval of the members in good standing of the Association. In the case of the APOA, this was impossible, as there were no members in good standing of the Association after 2010.
[48] Doug Gammie states in his affidavit,
…all of the last Board members of the APOA were out of office since about September of 2009. As well, the Amabel Property Association had not conducted any business or taken any membership dues (new or recurring) since approximately 2009.
[49] Beginning in 2010, when all of APOA’s 2009 memberships lapsed, there were no members remaining in the APOA. The Constitution and By-Laws of the APOA provide:
Article III Member and Membership:
A member must be a paid up person in the association as vouched by the Director/Membership Coordinator. The member meeting this criterion may then vote or make amendments to the Constitution and Bylaws and participate in the election of the new or re-elected Directors. There shall be only one vote cast per member. Any member may also be entitled to stand for election as a Director. A member is also welcome to attend any of the monthly Directorship meetings by contacting one of the Directors. An annual membership fee is determined by a resolution of the Board of Directors and voted on by same. The membership fee must be paid thirty days prior to the annual meeting or in exceptional cases, paid prior to the start of the annual meeting to the Director/Co-ordinator of Membership. [Emphasis added]
[50] Additionally, beginning in 2010, when the terms of the APOA’s directors expired, there were no members remaining on the Association’s board of directors. The Association’s Constitution and By-laws provided, in this regard:
Article IV Directors & Board of Directors
The affairs of the association shall be managed by its Board of Directors. The election of the Directors is done at the Annual Meeting and will require a simple majority vote from the general membership. All directors will be assigned a position on the Board and must take an active role, as an elected officer of the Association.
The term of a Director is one year, from one Annual Meeting to the next. [Emphasis added]
[51] No new members were elected to the Board, no existing board members were re-elected, and no Annual General Meetings was held, as required by Article VI of the Constitution.
[52] Mr. Gammie states that he attempted to pay his dues at the May 3, 2014, meeting of the Board, or of the former Board, and upon his dues being refused, paid them to himself. He states that he convened a further meeting in July 2014, where those present reversed the decision made at the earlier meeting, dissolving the Association. Mr. Gammie, not being the President of the Association, had no authority to convene a meeting of the Board in July 2014. The Constitution and By-laws of the APOA provide, in part:
Article IV Directors & Board of Directors
Meetings of the Board of Directors shall be called by the president/vice-president as to time and place.
[53] Additionally, the Constitution and By-laws of the Association do not provide that the APOA can be revived in the manner employed by Mr. Gammie. Both because the July 2014 meeting was improperly convened and because the decision made at the meeting was a fundamental one affecting the continued existence of the Association and was not authorized by the APOA’s constitution, I find that the decision was invalid.
[54] In the present case, the APOA had no members in good standing, as defined by its Constitution and By-laws. It also had no directors whose terms had not expired, and it had held no Annual General Meetings or meetings of its board of directors from April 2009 until at least 2013. The APOA’s Constitution, read as a whole, does not support a conclusion that it was the intention of the APOA’s members that their association would survive inaction for an extended period of time. I therefore find that the APOA ceased to exist in 2010, when the memberships of its members lapsed, and the terms of its directors expired.
[55] In The Polish Alliance of Canada v. Polish Association of Toronto Limited, in 2014,[^10] Myers J. held that disgruntled board members of a branch of an association was not entitled to take property belonging to the association as a whole. In that case, there were still members in good standing of the association. That is not the situation here. The APOA name and the $13,000 that was in the former Association’s account could no longer be used by it for the purposes set out in its constitution because there were no longer members in good standing of the APOA and, therefore, the Association had ceased to exist.
(v) A trust arises in relation to the property of an unincorporated association when the association ceases to exist
[56] In Wawrzyniak v. Jagiellicz, in 1988, Campbell J. held that the majority of an Association, when it left the Association, could not take with them the assets of the Association except with the unanimous approval of the entire membership. Justice Campbell stated:
The majority although free to leave cannot ordinarily take with them the assets that belong to the membership at large unless the step is taken with unanimity of all the membership. Unless authorized by the constitution, a mere majority of members cannot cause property to be diverted to another association having different objects. When the majority of an association leave, they trigger the clubman's veto. The clubman's veto was discussed by Blair J.A. in Polish Veterans Corps, supra, at p. 339 O.R., p. 467 D.L.R., by Wilson J.A. at p. 345 O.R., p. 473 D.L.R., and by Dubin J.A., dissenting, at p. 325 ff. O.R., p. 453 ff. D.L.R. They agreed that the transfer of property, as opposed to the transfer of affiliation, could ordinarily be accomplished only by a unanimous membership unless the constitution specified otherwise.[^11] [Emphasis added]
[57] Referring to an earlier decision of Chief Justice McRuher later upheld by the Court of Appeal, Justice Campbell stated:
He thus applied the fundamental principle that the trustees of an unincorporated association hold its property in trust not for a majority of the members but for all the members. A majority cannot deprive members of their rights in the property of the club. A transfer without unanimity from the trustees to a corporation results in an implied or constructive trust. The corporation holds as trustee for the members in good standing from time to time of the post. [Emphasis added]
[58] The Court of Appeal upheld Campbell J.’s decision in Wawrzyniak v. Jagiellicz. It held that, in the absence of a unanimous divestiture by the Association of its property, the property continued to be held in trust for the benefit of the membership as a whole. The Court of Appeal stated:
There is no evidence that the owner of the beneficial interest in the property intended to transfer that interest to the corporation. We agree, therefore, with Campbell J. that the conveyance from the trustees of the association to the corporation was not effective to carry the interest in the property: it only resulted in a trust whereby the corporation holds the property on the same trust as that to which the trustees of the association were subject. The judgment below should however be modified as follows: para. 1 will permit that the property is held in trust for the plaintiffs and other lawful members of the unincorporated association and para. 3 will provide that the persons nominated as trustees shall be entitled to possession. Save for these variations, the appeal is dismissed with costs.[^12]
[59] In Provincial Plasterers' Benefit Trust Fund (Board of Trustees) v. Provincial Plasterers' Benefit Trust Fund, in 1990, Osbourne J. held that when the members of one local union that operated a trust fund for its members left to join another union, which later amalgamated with it and left no members in the original union, the trustees of the fund were required to apply any surplus to such purposes as, in their opinion, would best implement the trust. Osbourne J. therefore directed the trustees to merge the fund with the fund of the union with which the original union had amalgamated.[^13]
[60] In the present case, there were no longer any members in good standing of the old association. In those circumstances, Doug Gammie, as the last-serving President and signing officer of the APOA, became trustee of the Association’s name and property, holding them for the benefit of all of the property owners of the former Amabel Township, in accordance with the purposes and goals set out in the APOA’s constitution.
[61] The Constitution and By-laws of the APOA set out the following purposes and goals of the Association:
Article II Purpose & Goals
• The association is a non-profit organization acting in a responsible manner and abiding by the laws of the land and promises to act as a representative and advocate for its membership of property owners within the former Township of Amabel, in the Town of South Bruce Peninsula. In addition, the association will maintain a positive presence in the community as the Board of Directors sees fit.
• Assist in the preparation, communication, and execution of all statutes, by-laws, ordinances and other governmental regulations designed to secure the comfort, safety and welfare of the property owners.
• Liaison with Town Council and our Council Representatives. Also, liaison with other Municipalities in the County of Bruce in matters that could concern Amabel property owners. Maintain contact with both Federal and Provincial Governments and their respective MP and MPP, who could assist in pertinent and sensitive areas relating to our community. Hold “MEET THE CANDIDATE MEETINGS” for all municipal elections.
• Maintain monthly Director meetings (weather permitting) and an annual meeting of all members of the association (during the summer months).
• Maintain a WEBSITE in order to keep our membership informed on our activities and current events. In addition, prepare a quarterly newsletter to go out by mail to all members, who do not have access to a computer. This newsletter is also posted to the web.
[62] Doug Gammie, with the support of a majority of the former members of the APOA’s board of directors, at their meeting on May 3, 2014, assigned the name and property of the Association to the SBRPOA. The SBRPOA then incorporated the new APOA to carry on the mandate of the former Association. The Letters Patent of the incorporated APOA describe its objects as follows:
The establishment and operation of Amabel Property Owners Association for the purposes of:
• Addressing issues and concerns of all owners of residential property in Sauble Beach Ontario (formerly known as Amabel). This includes year-round and seasonal residents;
• Promoting and creating a voice for owners to be heard by politicians;
• Promoting cultural and social interest of all residents, while actively supporting politicians that demonstrate support for and encourage property rights;
• And such other complementary purposes not inconsistent with these objects.
[63] In Astgen et a. v. Smith et al., supra, Laskin J.A. in a dissenting decision stated that where the action of an unincorporated association is not provided for by its constitution, he would not hold the action, for that reason alone, beyond the competence of its membership. Justice Laskin stated that in such a case, the common law or, in some cases, legislation, requires notice and unanimity in order to bring about a dissolution.[^14] This follows, he said, from the contractual principle of membership enunciated in Orchard et al. v. Tunney, in 1957.[^15] Although Laskin J.A. acknowledged that there are difficulties with the contract theory,[^16] he concluded that it is a workable rule which the court must adapt, where possible, to the facts of a case before it.
[64] Laskin J.A. held that if proper notice was given, and the constitution or by-laws of the association are broad enough to give a majority of the board authority to amend its constitution to provide for dissolution or merger, their authority, even in the absence of such an amendment, should not be limited, provided that the effect would further the objects of the Association. He stated:
[A]gain with due regard to Orchard v. Tunney, supra, I do not think that a general constitutional provision for taking decisions by majority referendum vote should be read restrictively against a change of identity or of affiliation, as long as fundamental objects remain substantially the same. There may, of course, be a dispute as to what is and what is not fundamental, but, this apart, a merger which does not involve a change in fundamental objects or purposes is, in my view, a proper subject of a referendum under s. 2 of art. 26.
I have mentioned the question of identity or affiliation as if a change in that respect would not be in a fundamental matter. It may be thought that there is a conceptual difficulty here because if the contract theory of membership is to be taken in a literal appreciation of contract law, then it is certainly arguable that a change of identity of membership or of affiliation is a fundamental change which, in itself would support the respondents' position. This was not urged before the Court except tangentially. I am of opinion, however, that this line of argument proceeds upon an improper premise, namely that provisions for change under the constitution by a majority vote should not be taken to include either change of identity or change of fundamental object where not clearly spelled out. I do not think that identity or of affiliation, as such, should be regarded as critical for the character or nature of an unincorporated association. I would not qualify constitutional (i.e., contractual) provisions for change to exclude their application to identity or affiliation if the objects - the fundamental objects - remained substantially the same. In other words, I have in the present case no encouraging answer for the question "What's in a name?"
[65] Both the jurisprudence that imposes a trust on the property of unincorporated associations that have ceased to exist or have become dysfunctional, and the contractual principles that constrain the actions of such associations’ directors, guided Laskin J.A. to support the decisions of a majority of directors to re-constitute the Association when acting in furtherance of the association’s constitutional objects. This supports the view that those constitutional objects are the framework upon which the trustee must exercise his obligations. On that basis, this court must recognize the decision made by Doug Gammie, as the last serving president of the APOA and as trustee of the Association’s name and property(with the support of a majority of its former board members), to assign the name and funds to the SBRPOA or its designate, the incorporated APOA, as a means of furthering the objects set out in the APOA’s Constitution and By-laws.
[66] Both the name of the APOA and the $13,000 that remained in its treasury when the Association ceased to operate were impressed with a trust for the benefit of all of the members in good standing of APOA. In the absence of such members in good standing, the name and funds were impressed with a trust for the benefit of all property owners of the former Amabel Township, for whose benefit the APOA was formed and the funds were initially given to it. If Doug Gammie transferred the funds to the incorporated APOA, that transfer was subject to the same trust set out in the former APOA’s constitution, i.e. for the benefit of all of the property owners in the former Amabel Township, and that of the property owners of Sauble Beach alone.
[67] If Doug Gammie and the former board members of the APOA did not assign APOA’s name or property to the SBRPA or the newly incorporated APOA, the funds would be subject to escheat by the Crown by reason of the former APOA having ceased to exist. The Escheats Act provides, in this regard:
Escheat
- Where Her Majesty the Queen in right of Canada is entitled to any land or other real or personal property by reason of the person last seised or entitled thereto having died intestate and without lawful heirs or by reason of any corporation, association or society having been finally dissolved or wound up or having ceased to exist, the Attorney General of Canada may cause possession thereof to be taken in the name of Her Majesty, or if possession is withheld, may exhibit an information in the Federal Court for the recovery thereof.[^17]
[68] The policy of ensuring that the property of unincorporated associations is used to further the objects of the association, as reflected in their constitutions, favours a decision that gives effect to the assignment made by Doug Gammie and the majority of the former members of the APOA board to assign the name and property of the Association to the entity best able to carry out the Association’s purposes, rather than permitting the name to fall into disuse and the funds to be forfeited to the Crown.
COSTS
a) General principles
[69] The court’s determination of costs is governed by section 131 of the Courts of Justice Act[^18] and by Rule 57.01 of the Rules of Civil Procedure.[^19] Section 131 provides for the general discretion to fix costs. Rule 57.01 provides guidance as to the exercise of that discretion, by enumerating certain factors that the court may consider when assessing costs.
[70] Among the factors set out in Rule 57.01(1) are the following:
(i) The complexity of the proceeding;
(ii) The importance of the issues;
(iii) The conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(iv) Any offers to settle;
(v) The principle of indemnity;
(vi) The concept of proportionality, which includes at least two factors:
(a) The amount claimed and the amount recovered in the proceeding; and,
(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;
(vii) Any other matter relevant to the question of costs.
[71] Justice Perell summarized the purposes of costs orders in 394 Lakeshore Oakville Holdings Inc. v. Misek, in 2010. He stated:
Modern costs rules are designed to advance five purposes in the administration of justice: (1) to indemnify successful litigants for the costs of litigation, although not necessarily completely; (2) to facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences; (4) to discourage the sanctioning of inappropriate behaviour by litigants in their conduct of the proceedings; and (5) to encourage settlements.[^20] (internal citations omitted).
[72] The court's role in assessing costs is not necessarily to reimburse a litigant for every dollar spent on legal fees. As the Court of Appeal pointed out in Boucher et al. v. Public Accountants Council for the Province of Ontario, in 2004, the award of costs must be fixed in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceedings rather than an exact measure of actual costs to the successful litigant.[^21]
[73] In reviewing a claim for costs, the court does not undertake a line by line analysis of the hours claimed, and should not second-guess the amount claimed, unless it is clearly excessive or overreaching. It considers what is reasonable in the circumstances and, taking into account all the relevant factors, awards costs in a global fashion.[^22]
[74] Ultimately, in determining the amount of costs to be awarded, the court applies fairness and reasonableness as overriding principles. It does not engage in a mechanical exercise but, rather, takes a contextual approach, applying the principles and factors discussed above, and setting a figure that is fair and reasonable in all the circumstances. Rule 1.04(1.1) of the Rules of Civil Procedure requires the court to consider proportionality; that is, the amount of costs ordered should be proportional to the amount of money and other interests at stake in the proceeding.
b) Entitlement to costs
Reasonableness and offers to settle
[75] The general rule is that costs follow the event, and are awarded on a partial indemnity scale.[^23] In special circumstances, costs may be awarded on a higher scale, but those cases are exceptional and generally involve circumstances where one party to the litigation has behaved in an abusive manner, brought proceedings wholly devoid of merit, and/or unnecessarily run up the costs of the litigation.[^24]
[76] Mr. Gammie’s application and the manner in which he pursued was unreasonable and would entitle Mr. Jordan to recover costs on a higher than usual scale. The application was unsuccessful and wholly devoid of merit, and Mr. Gammie should have been able to predict the outcome from the outset.
[77] Mr. Gammie’s affidavit material in the present proceeding is 300 pages long. By contrast, Mr. Jordan’s affidavit material is 40 pages long. The transcript of Mr. Gammie’s cross-examination of Mr. Jordan is 163 pages long. By contrast, the transcript of Mr. Jordan’s cross-examination of Mr. Gammie is 36 pages long. Much of Mr. Gammie’s cross-examination of Mr. Jordan was confusing and unnecessary. For example, 29 pages (Pages 30 to 59) of the transcript were consumed with exploring the questions “why change the name of the organization from SBRA to SBRPOA?”
[78] These factors notwithstanding, for reasons that follow, there is no need to apply a higher scale to achieve the objective of fully indemnifying Mr. Jordan for the costs he incurred.
Indemnification - The hourly rates charged
[79] In determining the appropriate hourly rates to be applied to the time spent by Mr. Jordan’s lawyer, the court follows the approach taken by Aitkin J. in Geographic Resources.[^25] That is, the starting point is the successor of the Costs Grid, namely, the “Information for the Profession” bulletin from the Costs Sub-Committee of the Rules Committee (the “Costs Bulletin”), which can be found immediately before Rule 57 in the Carthy or Watson & McGowan edition of the Rules. The Costs Bulletin sets out maximum partial indemnity hourly rates for counsel of various levels of experience.
[80] Leigh Fishleigh, Mr. Jordan’s lawyer, was called to the Bar in Ontario in 1991. He had practiced law for 25 years when this application was heard. The Costs Bulletin suggests a maximum hourly rate (on a partial indemnity scale) of $350 for lawyers with 20 years’ experience or more.[^26]
[81] The upper limits in the Costs Bulletin are generally intended for the most complex and important of cases. The issues in the present application were factually and legally complex. They arose from the history of two associations over the course of several years, and the legal principles governing the formation and dissolution of unincorporated associations, trust obligations of officers of such associations, and assignments of an association’s name and property.
[82] The Costs Bulletin, published in 2005, is now dated. Aitkin J. considered adjusting the Costs Subcommittee’s hourly rates for inflation, as Smith J. did in First Capital (Canholdings) Corp. v. North American Property Group,[^27] but the unadjusted rates of the lawyers in her case were only slightly less than the actual fees they charged, so she elected to use their unadjusted rates. Normally, however, it is appropriate to adjust the hourly rates in the Costs Bulletin to account for inflation since 2005.
[83] Based on the Bank of Canada Inflation Calculator, available online at http://www.bankofcanada.ca/rates/related/inflation-calculator/, the 2016 equivalent of the hourly rate in the Costs Bulletin for lawyers of over 20 years’ experience is $417.92, which I would round up to $418.
[84] The court is guided by the rates in the Costs Bulletin, not the actual hourly rates charged. The Costs Subcommittee’s rates apply to all lawyers and all cases, so everyone of the same level of experience starts at the same rate. The actual rates charged are relevant only as a limiting factor, in preventing the costs awarded from exceeding the actual fees charged.
[85] The court adjusts the total fees arrived at by applying the inflation-adjusted hourly rates of the lawyers to the time spent, to reflect unique features of the case, including the complexity of the proceeding, the importance of the issues, and the other factors set out in Rule 57.01(1). If an excessive amount of time was spent, or too many lawyers worked on the file, the court reduces the resulting amount of fees accordingly. As long as the resulting amount does not exceed the amount actually charged to the client, the actual fee that the client agreed to pay is irrelevant.
[86] Based on the Costs Bulletin, adjusted for inflation, Mr. Fishleigh was entitled to claim a maximum hourly rate of $418, on a partial indemnity scale, for the time he spent on the case. Rule 1 of the Rules of Civil Procedure defines substantial indemnity costs as meaning "costs awarded in an amount that is 1.5 times what would otherwise be allowable in accordance with Part I of Tariff A" - i.e. 1.5 times the partial indemnity rate.[^28] Costs calculated on a substantial indemnity scale, obviously, represent something less than full indemnity.
[87] On a substantial indemnity scale, the maximum inflation-adjusted hourly rate of Mr. Fishleigh is $627 ($418 x 1.5). Mr. Jordan claims his costs for his initial response to the Application at the rate of $194.45, and the costs for responding to Mr. Gammie’s Reply at the rate of $300 per hour. These rates are conservative, even on a partial indemnity scale. Mr. Jordan should be fully indemnified for his costs at these rates. There is no basis to award his costs on a substantial indemnity scale, as the costs he claims are fully covered by partial indemnity costs and costs awarded to a litigant should not exceed the costs actually incurred[^29] in the absence of special fee arrangements, such as Legal Aid funding or a Legal Services Protection Plan.[^30]
[88] Mr. Fishleigh spent 68.4 hours in his initial response to the Application, including preparing his reply affidavits, preparing and attending cross-examinations, preparing an Offer to Settle, and reviewing transcripts from the cross-examination and preparing Mr. Jordan’s factum. He claims these costs at the rate of $194.45 per hour, which is the full amount he charged his client. He spent a further 14.5 hours responding to Mr. Gammie’s reply, which he claims at the rate of $300 per hour, again being the full amount he charged his client.
[89] Mr. Jordan claims an additional 4 hours for travel between Mr. Fishleigh’s office in Fergus, Ontario, and the courthouse in Owen Sound, at $100 per hour. Courts have not been unanimous as to whether counsel’s hourly rates should be allowed, denied, or reduced, for travel time. Spies J. in Rosen v. Slovan-Rosen (2010) held that travel time should not be included in recoverable costs on a partial indemnity scale.[^31] Zisman J. in the Ontario Court, came to the same conclusion in Wilson v. Marchand (2007).[^32] While other judges have allowed costs for travel time, they have differed as to whether counsel’s hourly rates should be reduced for such time. Their difference of opinion on this issue is evident in Gatta v. The Corporation of the City of St. Catharines, (2010). In that case, Taliano J. stated:
Counsel for the plaintiff takes the position that travel time should not be permitted. Counsel for the defendant relies on Mallory v. Mallory, 1998 CanLII 29653 (ON SC), [1998] O.J. No 41 where my learned colleague, Quinn J., held that travel time should not only be permitted but should be allowed at counsel’s full chargeable hourly rate without discount since counsel while travelling, “is representing his/her client to the exclusion of all other clients and their needs.” He went on to conclude that to discount counsel’s hourly rate would ignore the harsh fiscal reality of the business of law. My view is that, although travel time which is necessary to the performance of counsel’s duties should be compensable, the rate of compensation should be reduced to reflect the fact that the litigator’s skills are not generally engaged during travel time. That being the case, a lower rate of compensation is more appropriate. In this case, I would allow travel time at 50% of the substantial indemnity rate and I would therefore reduce the full indemnity bill by $4,219.[^33]
[90] The weight of authority favours a reduction of counsel’s hourly rate for travel time by 50%, at least where costs are awarded on a partial indemnity scale. Orkin in The Law of Costs, states:
Where a solicitor’s retainer requires him to travel on behalf of the client he is not entitled to be paid at the same rate for traveling time as he is for solicitor’s work….Full rates charged for traveling time have been reduced on assessment, either by a reduction in the amount of time to be allowed or by allowing the full amount of time recorded but reducing the rate substantially below the solicitor’s normal billing rates….”[^34]
[91] It is common practice for courts to reduce counsel’s hourly rate for travel. Arrell J., in awarding partial indemnity costs in The Corporation of the City of Brantford v. Montour (2013), allowed travel time but found that “full rates” should not be allowed for it.[^35] Flynn J. allowed travel time at half of counsel’s regular partial indemnity hourly rate in Paonessa v. Armstrong (2003),[^36] as did Pierce J. in MacRae v. Santa, (2003),[^37] Sproat J. in Daurio v. Cameron, (2005),[^38] and Wein J. in Fraser v. UBS, (2012).[^39]
[92] Based on these authorities, the $100 claimed by Mr. Jordan for Mr. Fishleigh’s travel, being approximately 50% of the lowest hourly rate of $194.45 which he charged for his legal services, and 33% of the higher rate which he charged for responding to Mr. Gammie’s reply, is reasonable, and I allow that portion of his costs in the amount claimed.
Other factors - Disbursements
[93] Mr. Jordan claims disbursements in the amount of $738.64 for his initial response to the Application, the majority of which were for the examiner’s fees and the cost of transcripts, $52 for filing fees in connection with the response to Mr. Gammie’s reply. I find the disbursements to be reasonable and allow them at the amounts claimed.
Proportionality and the reasonable expectation of the unsuccessful parties
[94] Based on the foregoing, Mr. Jordan’s costs are as follows:
Fees:
68.4 hours @ $194.45 = $13,300.38
14.5 hours @ $300 = $ 4,350.00
4 hours travel @ $100 = $ 400.00
TOTAL: $18,050.38 $18,050.38
HST on fees: (13%): $2,346.55
Disbursements: $790.64
Total Fees and Disbursements (inclusive of HST): $21,287.57
[95] Mr. Gammie is a self-represented litigant and, accordingly, has not tendered a Costs Outline or Bill of Costs from his own lawyer, which might serve as a basis for determining the costs that he may reasonably have expected to pay if he was unsuccessful in his application. Mr. Jordan, in asking the court to award him his costs on a substantial indemnity scale, characterized Mr. Gammie’s conduct, in both the present and past litigation, as vexatious, although he did not ask for a declaration that Mr. Gammie is a vexatious litigant, with the remedies that can be associated with such a declaration.
[96] Mr. Jordan tendered the decision of the Divisional Court, dismissing Mr. Gammie’s appeal from an order made by this court, based on the divided success of the parties., In Gammie v. South Bruce Peninsula (Town), , the Divisional Court referred to Mr. Gammie’s “extensive litigation history” with the Town of South Bruce Peninsula, as follows:
• On April 20, 2012, Mr. Gammie launched an Application under the Municipal Conflict of Interest Act, R.S.O. 1990, c. M.50 (the “MCIA”), against volunteer members of the Board of Management of the Wiarton Business Improvement Area (Court File No. 12-120);
• On May 11, 2012, Mr. Gammie launched an Application under the MCIA against Jim Turner, a Councillor for the Town (Court File No. 12-138);
• On May 23, 2012, Mr. Gammie launched an Application under the Municipal Act, 2001, S.O. 2001, c. 25, as amended (the “Municipal Act, 2001”), seeking to quash a Town by-law to set and levy the rates of taxation for the Town (Court File No. 12-145);
• On October 2, 2012, Mr. Gammie launched an Application under the MCIA against John Close, th Mayor for the Town (Court File No. 12-262);
• On November 2, 2012, Mr. Gammie launched an Application udner the Municipal Act, 2001, seeting to quash a Town Council resolution that prohibited Mr. Gammie from attending and entering the Town’s Council Chambers, committee meetings and Town Hall facilities (Court File No 12-315);
• On January 14, 2013, Mr. Gammie launched an Application udner the MCIA against Mayor John Close, Councillor Jim Turner, Councillor Paul McKenzie, Councillor Jay Kirkland and Councillor Karen Klages, all of whom were members of the Town’s Council (Court File No. 13-007);
• On September 5, 2014, Mr. Gammie launched an application under the Municipal Act, 2001, seeking to quash a Town resolution to prohibit him from attending and entering the Town’s facilities (Court File No. 13-188);
• On September 5, 2013, Mr. Gammie launched an application udner the Muncipal Act, 2001, seeking to quash the Town’s Intemnification By-Law (Court File No. 13-189);
• Mr. Gammie also launched three defamation claims in Small Claims Court against Mike McMillan, the former Chair of the Town’s Economic Development Committee, Marilyn Bownman, a Councillor for the Town, and Jay Kirkland, a Councillor for the Town.[^40]
[97] While it is neither necessary nor appropriate for the court in the present proceeding to determine whether Mr. Gammie’s conduct was vexatious, the history of his litigation, as described by the Divisional Court, supports the conclusion that he is an experienced litigator who must be aware of the costs associated with litigation and the effect that the volume of material he generated in the present proceeding was likely to have in increasing the costs that Mr. Jordan incurred in responding to it. For these reasons, and based on my observation of the volume of material tendered at the hearing, and the nature and extent of oral argument, I find that Mr. Gammie should reasonably have expected to face costs in the amount being awarded to Mr. Jordan if he was unsuccessful.
CONCLUSION AND ORDER
[98] For the foregoing reasons, it is ordered that:
a) Mr. Gammie’s application is dismissed.
b) Mr. Gammie shall pay to Mr. Jordan his costs, which I fix in the amount of $21,287.57, inclusive of fees, H.S.T., and disbursements, payable forthwith.
Price J.
Released: January 5, 2017
CITATION: Gammie v. Jordan, 2017 ONSC 124
COURT FILE NO.: Walkerton 106/14
DATE: 2017-01-05
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
CRAIG GAMMIE
Applicant
- and –
DOUG JORDAN
Respondent
REASONS FOR ORDER
Price J.
Released: January 5, 2017
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