Raimondi v. Ontario Heritage Trust, 2017 ONSC 6121

CITATION: Raimondi v. Ontario Heritage Trust, 2017 ONSC 6121

COURT FILE NO.: CV-15-3006-00

DATE: 20171012

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: IDALGO RAIMONDI and NANCY RAIMONDI (“applicants”)

v.

ONTARIO HERITAGE TRUST and NICOLA ROSS (“respondents”)

BEFORE: DALEY, RSJ.

COUNSEL: P. Virc, for the Applicants

S. Gandhi and S. Figliomeni, for the respondent, Ontario Heritage Trust

P.D.S. Jackson and S. Whitmore, for the respondent, Nicola Ross

C O S T S E N D O R S E M E N T

1The applicants’ application against both respondents was dismissed. Reasons were released on June 2, 2017.

2Both the respondents sought costs from the applicants. The claim for costs made by the respondent, Ontario Heritage Trust (“OHT”), was resolved on the basis that the applicants would pay the OHT costs, in the all-inclusive sum of $65,595.38.

3The respondent, Nicola Ross (“Ross”), seeks costs on a substantial indemnity basis in the all-inclusive sum of $157,743.83, with partial indemnity costs being in the all-inclusive sum of $84,836.79.

4The respondent, Ross, submits that this is a proper case for an award of substantial indemnity costs for the following reasons:

(1) the applicants engaged in a deliberate campaign to harm Ross including by making serious and unfounded allegations against her that struck at her personal and professional integrity;

(2) the applicants intentionally misled the court and the parties on material facts in the case, including the signs on the ROW and the words of the deed; and

(3) the applicants abused the court’s process in a manner that has led to re-litigation.

5Counsel representing by Ross were retained on a pro bono basis. The applicants submit that the time spent and disbursements incurred by Ross’ counsel far exceed the costs a reasonable person would expect to be incurred if Ross was paying for those services.

6Before addressing the positions of the parties, I will first consider the effect of the pro bono retainer on Ross’ entitlement to costs.

7While Ross was represented by her counsel pursuant to a pro bono retainer, she was responsible for the disbursements incurred, totaling $10,561.89. The retainer agreement further provided that any costs awarded to Ross in respect to her counsel’s time and services would be payable by Ross to the law firm.

8The purpose of an award of costs is no longer viewed as simply indemnifying the successful party. All courts have moved far beyond that purpose, and have recognized that modern costs rules should accomplish a number of other purposes, in addition to the traditional objective of indemnification.

9In the Supreme Court of Canada decision, British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, [2003] 3 S.C.R. 371, Lebel J., writing for the Court, considered costs as an instrument of policy. Lebel J. stated the following at paras 22, 23 and 25:

22 These background principles continue to govern the law of costs in cases where there are no special factors that would warrant a departure from them. The power to order costs is discretionary, but it is a discretion that must be exercised judicially, and accordingly the ordinary rules of costs should be followed unless the circumstances justify a different approach. For some time, however, courts have recognized that indemnity to the successful party is not the sole purpose, and in some cases not even the primary purpose, of a costs award. Orkin, supra, at p. 2-24.2, has remarked that:

The principle of indemnification, while paramount, is not the only consideration when the court is called on to make an order of costs; indeed, the principle has been called “outdated” since other functions may be served by a costs order, for example to encourage settlement, to prevent frivolous or vexations [sic] litigation and to discourage unnecessary steps.

23 The indemnification principle was referred to as “outdated” in Fellowes, McNeil v. Kansa General International Insurance Co. (1997), 1997 CanLII 12208 (ON SC), 37 O.R. (3d) 464 (Gen. Div.), at p. 475. In this case the successful party was a law firm, one of whose partners had acted on its behalf. Traditionally, courts applying the principle of indemnification would allow an unrepresented litigant to tax disbursements only and not counsel fees, because the litigant could not be indemnified for counsel fees it had not paid. Macdonald J. held that the principle of indemnity remained a paramount consideration in costs matters generally, but was “outdated” in its application to a case of this nature. The court should also use costs awards so as to encourage settlement, to deter frivolous actions and defences, and to discourage unnecessary steps in the litigation. These purposes could be served by ordering costs in favour of a litigant who might not be entitled to them on the view that costs should be awarded purely for indemnification of the successful party.

25 As the Fellowes and Skidmore cases illustrate, modern costs rules accomplish various purposes in addition to the traditional objective of indemnification. An order as to costs may be designed to penalize a party who has refused a reasonable settlement offer; this policy has been codified in the rules of court of many provinces (see, e.g., Supreme Court of British Columbia Rules of Court, Rule 37(23) to 37(26); Ontario Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Rule 49.10; Manitoba Queen’s Bench Rules, Man. Reg. 553/88, Rule 49.10). Costs can also be used to sanction behaviour that increases the duration and expense of litigation, or is otherwise unreasonable or vexatious. In short, it has become a routine matter for courts to employ the power to order costs as a tool in the furtherance of the efficient and orderly administration of justice.

10The question of whether or not pro bono counsel could seek costs was considered by Feldman J.A. in the Ontario Court of Appeal decision of 1465778 Ontario Inc. v. 1122077 Ontario Ltd. (2006), 2006 CanLII 35819 (ON CA), 82 O.R. (3d) 757 (C.A.) at paras. 34-35, where she stated as follows:

34It is clear from the submissions of the amici representing the views of the profession, as well as from the developing case law in this area, and I agree, that in the current costs regime, there should be no prohibition on an award of costs in favour of pro bono counsel in appropriate cases. Although the original concept of acting on a pro bono basis meant that the lawyer was volunteering his or her time with no expectation of any reimbursement, the law now recognizes that costs awards may serve purposes other than [page768] indemnity. To be clear, it is neither inappropriate, nor does it derogate from the charitable purpose of volunteerism, for counsel who have agreed to act pro bono to receive some reimbursement for their services from the losing party in the litigation.

35To the contrary, allowing pro bono parties to be subject to the ordinary costs consequences that apply to other parties has two positive consequences: (1) it ensures that both the non-pro bono party and the pro bono party know that they are not free to abuse the system without fear of the sanction of an award of costs; and (2) it promotes access to justice by enabling and encouraging more lawyers to volunteer to work pro bono in deserving cases. Because the potential merit of the case will already factor into whether a lawyer agrees to act pro bono, there is no anticipation that the potential for costs awards will cause lawyers to agree to act only in cases where they anticipate a costs award.

11Thus, it has been held that an award of costs serves multiple purposes. In the context of pro bono representation, the pro bono parties are subject to the ordinary cost consequences applying to normal parties. pro bono parties are not free to abuse the system without fear of the sanction of an award of costs, and access to justice is promoted by encouraging more lawyers to work pro bono.

12Although the applicants do not dispute the respondent Ross’ entitlement to costs on the basis that she is represented by pro bono counsel, it was submitted that she should be awarded costs in the sum of $30,000, a sum which is less than what was agreed to for the respondent OHT. This submission is based in part on the fact that Ross has instituted an action against the applicants Raimondi, and their counsel. Notably, as discussed below, after the commencement of the within application, the applicants have also instituted a separate action against Ross for damages that could not otherwise have been claimed in this application. Thus, there will be ongoing litigation collateral to this application.

13As to the affect of the pro bono retainer, I am of the view that while indemnification is one purpose for an award of costs, the other purposes discussed above are all engaged in this case, and as such, Ross’ entitlement to costs remains subject to any mitigating circumstances that would otherwise reduce her cost entitlement.

14On this evidentiary and informational record, there are no factors which weigh in favour of reducing an award of costs that Ross might otherwise have been entitled to as a litigant represented by counsel on a non-pro bono basis. There is no evidence of conduct on the part of Ross that would warrant any such reduction.

15As to Ross’ submission that the applicants should pay costs on a substantial indemnity basis, Strathy J. (as he then was) in Nazarina Holdings Inc. v. 2049080 Inc., 2010 ONSC 2559, [2010] O.J. No. 1810, reviewed in detail the considerations to be examined before awarding costs on a substantial indemnity basis. It was noted at para. 10 that “substantial indemnity costs are very much the exception and should only be awarded in ‘rare and exceptional cases to mark the court’s disapproval of the conduct of the party in the litigation’: Hunt v. TD Securities Inc., 2003 CanLII 3649 (ON CA), 66 O.R. (3d) 481, [2003] O.J. No. 3245 (Ont. C.A.) at para 123.”

16The conduct in question must be “reprehensible, scandalous or outrageous”: Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3 at para. 260.

17The first reason put forward Ross for an award of costs on a substantial indemnity basis is that the applicants engaged in a deliberate campaign to harm her. While the applicants appeared to demonstrate a significant degree of animosity and anger towards Ross, and made unfounded and reckless allegations against her, based on the record available I cannot conclude that these actions were done deliberately for the purpose of causing Ross reputational harm. This issue will be determined in the action brought by Ross against the applicants and their solicitors.

18With respect to the second reason put forward by Ross for substantial indemnity costs, namely that the applicants intentionally misled the court and the parties on material facts in respect to the signs on the ROW, while I have concluded that the misleading evidence offered by the applicants gave rise to an adverse inference against them as to their credibility, that conclusion standing alone would not give rise to a right to substantial indemnity costs.

19As to the third basis upon which substantial indemnity costs were sought, namely as a result of the alleged abuse of the court’s process that has led to re-litigation, there is no question that the application in this case was ill-conceived from the outset in terms of the relief sought. The applicants and their counsel insisted on proceeding with the application, requesting forms of relief that could not be pursued on the application. Eventually, halfway through the submissions on the application, the applicants conceded that the relief sought in subparagraph (e) of the prayer for relief in the Notice of Application could not be determined on the application. As a result, a separate statement of claim was issued by the applicants against the respondent Ross seeking that relief.

20The inclusion of the claims in subparagraph (e) for trial of an issue and an Order that Ross pay to the applicants damages in the sum of $50,000 for intentional infliction of emotional distress, interference with the applicants’ ROW, nuisance, invasion of privacy, harassment, and defamation all needlessly expanded the litigation. Further, these claims forced Ross to fully participate in responding to the applicants’ claims against OHT, as those claims were inextricably connected with the applicants’ claim for injunctive relief against Ross.

21The conduct of the applicants and their counsel in the prosecution of the application involved the combination of ill-conceived claims, misleading evidence on critical factual issues, and an overall expansion of the litigation beyond the necessary parameters for the determination of the question in issue regarding the ROW.

22While this was a close call, I have concluded that the applicants’ conduct does not rise to the level of being considered reprehensible, scandalous, or outrageous, and as such I have concluded that the successful respondent, Ross, is entitled to costs on a partial indemnity basis.

23The applicants essentially assert that Ross’ counsel handled her response to this litigation in an unreasonable fashion, when compared to how it would have been conducted had the respondent been paying for the services.

24It is notable that counsel for the applicants did not file a bill of costs or details as to counsel’s docketed time or the disbursements incurred. It was noted in the decision of Winkler J. (as he then was) in Risorto v. State Farm Mutual Automobile Insurance Co., (2003), 2003 CanLII 43566 (ON SC), 64 O.R. (3d) 135 at para. 10, that where the court does not have before it the bills of costs of all counsel, an attack on the quantum of costs based on excessive time spent “is no more than an attack in the air.” It has been held that the court can rightly make the inference that the party opposite devoted as much, or more, time to the proceeding as did the successful litigant seeking costs. This, however, is not determinative of a fair and proper amount for costs. It simply represents a factor that should be taken into account.

25Counsel for the applicants also urged that the costs claimed by Ross were excessive, given the costs settlement that was concluded by counsel for the applicants with counsel for the OHT in the sum of $65,595.38.

26I reject this submission. There is absolutely no symmetry between the costs paid by the applicants to counsel for OHT and the costs properly incurred by the respondent Ross’ counsel in responding to the application. Not only did counsel for Ross respond to the application in terms of the primary relief regarding the entitlement to the use of the ROW, they also were required to respond to the injunctive relief sought against Ross, and as well were required to respond to various claims for relief in subparagraph (e) of the prayer for relief, which was not recoverable within the application.

27Given the lack of a bill of costs from the applicants’ counsel, there is no evidence as to what amount of costs the applicants, as the unsuccessful parties, could reasonably have expected to pay.

28Turning to the provisions of Rule 57.01 (1) of the Rules of Civil Procedure, there are several provisions of this rule that require consideration in order to determine a fair and reasonable award of costs in the circumstances of this case.

29With respect to Subrule 57 (1) (f), regarding the conduct of a party that shorten or lengthen the proceedings, the strategic decisions made by the applicants to include various forms of relief that could not properly be advanced through the application added significantly to the length of the proceedings. Similarly, the applicants’ preliminary motion to strike certain affidavit material was unduly lengthy and ultimately unsuccessful.

30With respect to Subrule 57 (1) (d), regarding the importance of the issues, the applicants advanced a claim in defamation and seriously impugned the character of Ross. Ultimately, the claim of defamation was withdrawn for the purpose of the application so as to allow it to be advanced by way of a statement of claim. However, it was not until the argument of the application that the applicants withdrew the defamation claim for the purpose of this application. This was a serious claim, and in my view, all steps taken by counsel to respond to it were reasonable and economical having regard to the seriousness of the allegations.

31The application was moderately complex, partly because of the confusing evidentiary record presented by the applicants. The respondent Ross was not a necessary party to the application, so far as the determination of the rights between the applicants and the OHT were concerned.

32As to the amount in issue in regards to the respondent Ross, as referred to in Subrule 57 (1) (a), the fact that the costs claimed exceed the amounts at stake in the litigation is often one of the risks involved in pursuing or defending a case to the bitter end. As was noted by Lane J., “[t]o reduce the plaintiff’s otherwise reasonable costs on this basis would simply encourage the kind of intransigence displayed by the defendant in this case”: 163972 Canada Inc. v. Isacco (1997), 69 A.C.W.S. (3d) 435 at para. 3.

33The applicants urged that any award of costs to the respondent Ross should be in keeping with the damage claim asserted against her. For the reasons outlined by Lane J. in 163972 Canada Inc. v. Isacco, I reject this submission.

34As to fair and reasonable costs to be awarded to the respondent Ross, I have considered the very detailed bill of costs and I am satisfied that the partial indemnity costs claimed, both in respect of time spent and the disbursements incurred, are fair and reasonable and represent costs that the applicants should reasonably have expected to pay if unsuccessful. As such, I ordered that the applicants pay to the respondent Ross costs on a partial indemnity basis in the all-inclusive sum of $84,836.79.

35An order shall issue accordingly.

Daley, RSJ.