Houghton + Houghton Inc. et al. v. Farncomb Kirkpatrick et al., 2017 ONSC 1478

CITATION: Houghton + Houghton Inc. et al. v. Farncomb Kirkpatrick et al., 2017 ONSC 1478

COURT FILE NO.: CV-13-481530

DATE: 20170410

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Houghton + Houghton Inc., and Ward I. Houghton

AND:

Farncomb Kirkpatrick & Stirling Surveying Ltd., Robert D. Stirling, and Association of Ontario Land Surveyors

BEFORE: Madam Justice Jasmine T. Akbarali

COUNSEL: Robert C. Taylor, for the Moving Parties/Applicants

Robert J. Fenn and Ashleigh L. Tomlinson, for the Responding Party/Respondent Association of Ontario Land Surveyors

HEARD: March 3, 2017

ENDORSEMENT

Overview

[1] The moving parties/applicants seek an order granting leave to appeal the costs decision of Master Hawkins dated September 29, 2016. The costs decision arose out of a motion to strike certain portions of an affidavit of William Buck, filed by the responding party/respondent, the Association of Ontario Land Surveyors (“AOLS”) on the underlying application. The underlying application is for the determination of questions of statutory interpretation, a constitutional question and declaratory relief related to the Surveys Act, R.S.O. 1990 c. S. 30.

[2] The applicants also sought (in their factum but not in their Notice of Motion) an order setting aside the costs decision. AOLS objected to that relief on the basis that they did not have sufficient notice that the applicants would be seeking this relief on the motion, and that they would be prejudiced if they had to argue anything other than the motion for leave to appeal. The applicants sought to amend their Notice of Motion to add the additional relief and sought an adjournment to allow for a single hearing. I decided that only the motion for leave to appeal would proceed.

[3] AOLS raised a preliminary issue at the outset of the motion. It objected to the affidavit evidence filed on the motion that was not before the master. The parties agreed to proceed without resort to the affidavits, but agreed that the exhibits to the affidavits were properly in evidence. These consisted of documents that were before the master, and the notices of motion the applicants filed on the motion for leave to appeal.

[4] Finally, although motions for leave to appeal are generally heard in writing, the parties were given a hearing date and appeared before me prepared to argue the motion for leave. In the circumstances, to avoid further delay, I proceeded to deal with the motion.

The Position of the Parties

[5] The applicants argue that leave to appeal should be granted. They submit that the master erred in principle because he should have awarded them their costs since they were successful on the motion to strike. They argue that Master Hawkins overwhelmingly granted the relief they requested, striking from the affidavit in whole or in part 57 of the 66, or 86%, of the paragraphs the applicants attacked. They state that this amounts to just over half of the entire affidavit.

[6] AOLS argues that the master found as a fact that he could not determine which party was more successful, and so in an exercise of his discretion he reserved the costs of the motion to the judge hearing the underlying application. AOLS argues that he was entitled to exercise his discretion in this manner and that there is no basis to grant leave to appeal.

The Master’s Decision

[7] Master Hawkins released two decisions on the motion to strike. First, he released his decision on the merits. In this ten page decision, Master Hawkins reviewed three affidavits, only one of which – the Buck affidavit – was filed by AOLS. I focus on the Buck affidavit filed by AOLS below.

[8] Master Hawkins struck a number of paragraphs from the Buck affidavit because they contained legal argument. He held that the legal argument could be added to AOLS’s factum. He struck certain paragraphs because they did not comply with the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, in that Mr. Buck did not have personal knowledge of the information in his affidavit and did not specify the source of his information and belief. He held that the affidavit could be amended to cure these defects. Master Hawkins also struck certain paragraphs without leave to amend because they were irrelevant.

[9] In his costs decision, Master Hawkins noted that where one party is completely or largely successful on a motion, the court commonly awards costs of that motion to the successful party. However, he found that this was not a situation where it was clear as between the applicants and AOLS that one side was successful or largely successful. He allowed that the applicants were more successful “in terms of the number of paragraphs or clauses of affidavits struck out as opposed to the number of paragraphs or clauses which AOLS successfully defend [sic]”.

[10] However, Master Hawkins did not find that the quantity of paragraphs or clauses struck determined which party was largely successful. He noted that not all of the paragraphs or clauses under attack were of equal importance to the outcome of the main application. In his view, the relative importance of the particular paragraphs or clauses is a matter for the application judge.

[11] He also noted that not all paragraphs and clauses which were struck were “gone forever” because he gave leave to advance the legal argument in AOLS’s factum and leave to amend the Buck affidavit to bring it in compliance with the Rules of Civil Procedure. As a result, he found that “the success of the moving applicants is temporary at best”.

[12] Because the master was unable to say who clearly won and who clearly lost, he concluded that the just order as to costs was to reserve them to the judge hearing the main application.

Issues

[13] On this motion I must determine whether leave to appeal the Master’s costs decision should be granted.

The Test for Leave to Appeal a Costs Decision of a Master

[14] The parties agree that to appeal the costs decision of the master, leave is required.

[15] Section 17(a) of the Courts of Justice Act, R.S.O. 1990 c. C. 43 provides that an appeal lies to the Superior Court of Justice from an interlocutory order of a Master. It does not require leave to appeal a Master’s interlocutory order.

[16] However, s. 133(b) of the Courts of Justice Act provides that “no appeal lies without leave of the court to which the appeal is to be taken where the appeal is only as to costs that are in the discretion of the court that made the order for costs”. The section uses the term “court”, not “judge”, and as such, applies to a costs decision of a master. Thus, I agree with the parties that the applicants/moving parties require leave of the court to appeal Master Hawkins’ decision.

[17] Neither the Rules of Civil Procedure nor the Courts of Justice Act set out any test for leave to appeal an order of a master. However, case law articulates the test. Leave to appeal should be granted (i) sparingly; and (ii) where there are strong grounds on which the appellate court could find that the Master erred in exercising his discretion because he made an error in principle or his decision is clearly wrong: see McNaughton Automotive Ltd. v. Co-operators General Insurance Co., 2008 ONCA 597 at paras. 24-25; Passy Estate v. Forrest-Cluney, 2013 ONSC 5066 at para. 3; Berezowski v. Turner, [2009] 33517 (ON SC); Bougadis Chang LLP v. 1231238 Ontario Inc., 2012 ONSC 6409 (Div. Ct.).

[18] AOLS relies on r. 1.04(2) to argue that, because the Rules of Civil Procedure are silent with respect to the test for leave to appeal a master’s costs order, I should apply the test set out in r. 62.02(4) for leave to appeal to the Divisional Court by way of analogy. I reject this argument. There is jurisprudence that addresses the proper test; there is no gap that I must fill that requires me to draw an analogy to r. 62.02(4). As a result, I do not find the case law from the Divisional Court applying the test in r. 62.02(4) to be helpful in this case.

[19] AOLS also gave me the decision of Perell J. in Christian Jew Foundation v. The Christian Jew Outreach, 2007 20096 (ON SC) where he held, at para. 40, that the test for granting leave to appeal from a discretionary costs award has four elements: (i) the applicant must identify a good arguable case having enough merit to warrant the scrutiny of the court; (ii) the issues must be important both to the parties and in general; (iii) the appeal must have practical utility; and (iv) the court should consider the effect of the delay in proceedings caused by the appeal. I prefer the test described in McNaughton Automotive, although I note that the factors Perell J. identified in Christian Jew Foundation could be relevant to an assessment of whether the “sparingly” factor has been met in a given case.

[20] The applicants maintain that the test for leave to appeal a master’s costs order was set out by the Court of Appeal in McNaughton but they argue that the test is that leave should be granted if the Master has made an error in principle or if the costs award is plainly wrong. They rely on the Court of Appeal’s recitation of the Supreme Court of Canada’s decision in Hamilton v. Open Window Bakery, 2004 SCC 9 stating that the test to set aside a costs award on appeal requires that the judge has made an error in principle or the costs award is plainly wrong. I reject this argument. It conflates the leave to appeal test with the review of the decision on the merits, in effect doing away with the requirement of leave altogether.

Should leave to appeal be granted?

[21] Applying the test as I describe it at para. 16 above, I conclude it is not appropriate to grant leave to appeal Master Hawkins’ costs decision. I would have reached the same decision on any of the tests that were put to me on this motion.

[22] The applicants argue that this is an appropriate case to grant leave because Master Hawkins’ decision is contrary to the principle that costs should be fixed by the court that hears the motion. They argue it is contrary to the principle that successful parties should not be deprived of costs unless there are exceptional circumstances. They argue it is contrary to the principle that costs awards must be reasonable in all the circumstances. They thus argue that Master Hawkins exercised his discretion based on an erroneous principle.

[23] With respect to the argument that costs should be fixed by the court that hears the motion, the applicants rely on William F. White v. Toronto (City) Chief Building Official (2000), 47 C.P.C. (4th) 304 (Ont. S.C.J.), where the court commented that judges and masters who hear motions should determine the costs of those motions because they have knowledge of the issues and the hearing; it is thus the most efficient means of addressing costs. However, that case contrasts the judge’s or master’s determination of costs with the referral of costs to an assessment officer. It does not speak to reserving the costs to a judge conducting a related hearing.

[24] The applicants also rely on r. 57.03(1), which provides that a court hearing a contested motion “shall” fix costs “unless the court is satisfied that a different order would be more just”.

[25] In this case, the master, in his discretion, concluded that “the just order” was for costs to be reserved to the application judge. He found that the judge hearing the application would be in a better position to determine which party succeeded on the motion in a qualitative, not a quantitative, sense because that judge would deal with the underlying application on its merits. There is no inefficiency in this determination. The application judge will have to become familiar with the issues in any event. Remembering the deference that a master is owed in respect of a discretionary costs order, I see no strong grounds on which an appellate court could conclude that the master erred in principle in reaching his conclusion, nor do I see strong grounds on which an appellate court could conclude that his decision to reserve costs to the application judge was clearly wrong.

[26] Nor does the applicants’ argument that successful parties should not be deprived of costs unless there are exceptional circumstances establish strong grounds to believe the master made an error in principle. This argument puts the cart before the horse; it assumes that the applicants were the most successful party based on a numerical analysis of paragraphs or clauses struck from the Buck affidavit. Master Hawkins, however, did not reach this conclusion. Rather, he stated he was unable to conclude which party was more successful. Before the applicants can establish that there was an error in principle in the exercise of the master’s discretion, they must first establish he made a palpable and overriding error in not concluding the applicants were more successful on the motion.

[27] I see no palpable and overriding error in the master’s conclusion that he could not determine which party was more successful. Success cannot be measured simply by counting paragraphs, but requires a qualitative analysis of the relative importance of paragraphs struck versus those that were not struck. The determination of which party succeeded may also require consideration of the fact that many paragraphs or clauses were struck with leave to amend the affidavit and the factum. In other words, whether the motion was a proportional step in view of the time it took and what it achieved is relevant to the assessment of success on the motion and of costs.

[28] The applicants argue that the master erred by not explaining why the paragraphs that were not struck were so important that they could lead to a conclusion that success was divided, or that AOLS enjoyed greater success on the motion. I reject this argument. The master’s point was not that AOLS enjoyed greater or equal success on the motion, but that the master was not in the best position to gauge the relative importance of the paragraphs that were struck and those that were not. He could hardly explain why the paragraphs he did not strike were more important when he concluded that the application judge would be in the best position to make that determination.

[29] In circumstances where the master could not determine which party was more successful, it would have been an error in principle to award costs. There are no strong grounds for an appellate court to conclude that the master erred in principle in reserving costs to the application judge, who will be in a better position to determine the relative success of the parties on the underlying application. There are no strong grounds on which an appellate court could conclude that the master’s decision to reserve costs was clearly wrong.

[30] Finally, the applicants argue that the master’s decision did not respect the principle that costs must be reasonable in the circumstances, or the result may be contrary to the fundamental objective of access to justice: Davies v. Clarington (Municipality), 2009 ONCA 722 at para. 52.

[31] In this case, the master did not deny the applicants their costs. He reserved costs to the application judge. The applicants may yet receive their costs following the hearing of the application on its merits. There is no evidence before me, nor any suggestion, that the applicants are impecunious. There is no evidence before me that establishes that access to justice concerns are engaged. The applicants argued they were at an economic disadvantage as compared to the AOLS. That may be so, but costs cannot be awarded on that basis, nor does relative economic disadvantage necessarily equate to an access to justice concern. I conclude that there are no strong grounds for an appellate court to conclude that reserving costs to the application judge was unreasonable so as to amount to an error in principle or to be clearly wrong.

[32] Moreover, this is not an appropriate case in which to grant leave to appeal, recognizing that leave is only granted sparingly. There is little utility in this appeal given that there is no final costs order on the motion, but only an order reserving costs to the application judge. In my view, it is preferable that this application, which was commenced in 2013, proceed to a hearing rather than being further delayed by a costs appeal.

[33] Accordingly, I dismiss the motion for leave to appeal the costs decision of Master Hawkins.

Costs

[34] The parties agreed that costs of the motion on a partial indemnity scale are appropriate. They each filed costs outlines seeking a similar amount. AOLS has been successful on this motion. There is no reason to depart from the usual rule that costs follow the event.

[35] Costs must be fair and reasonable, having regard to the reasonable expectations of the parties. In my view, the costs claimed by AOLS are too high. The hourly rates claimed by AOLS’s senior counsel are higher than that claimed by the applicant’s counsel although the applicant’s counsel is more senior. Moreover, AOLS had two counsel at the motion, while the applicant had only one.

[36] AOLS’s partial indemnity costs as disclosed on the costs outline is $13,173.31. The applicants would have sought $11,013.16 in partial indemnity costs had they been successful.

[37] I conclude that costs in the amount of $10,000 inclusive of HST and disbursements are fair and reasonable. The applicants are to pay this amount to AOLS within thirty days.

Madam Justice Jasmine T. Akbarali

Date: April 10, 2017