CITATION: Ottawa Humane Society v. Ontario Society for the Prevention of Cruelty to Animals, 2017 ONSC 7523
COURT FILE NO.: 16-69432
DATE: 20171221
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
OTTAWA HUMANE SOCIETY, HAMILTON/BURLINGTON SPCA, WINDSOR-ESSEX COUNTY HUMANE SOCIETY, CAMBRIDGE AND DISTRICT HUMANE SOCIETY, OAKVILLE & MILTON HUMANE SOCIETY, LONDON HUMANE SOCIETY and ANIMAL WELFARE AGENCY SOUTH CENTRAL ONTARIO
Applicants
– and –
ONTARIO SOCIETY FOR THE PREVENTION OF CRUELTY TO ANIMALS and the Chief Inspector of the OSPCA
Respondents
Thomas G. Conway and Owen M. Rees, for the Applicants
William C. McDowell and Anne E. Posno, for the Respondents
HEARD: May 12, 2017
decision on costs
Beaudoin J.
Background
[1] The Ontario Society for the Prevention of Cruelty to Animals Act, R.S.O. 1990, c. O.36 was first enacted nearly 100 years ago and the OSPCA has been Ontario’s animal welfare charity since 1873. The OSPCA has been responsible to maintain and enforce the Act and specifically, the prevention of animal cruelty since 1919. Prior to April 2016, and for over a decade, the OSPCA faced governance-related challenges and the OSPCA Board sought to change its governance model through a series of new by-laws. The passage of these new by-laws was challenged by the Applicants herein who originally sought interlocutory injunctive relief. The parties then agreed to argue the application on its merits before Justice Ray on October 17, 2016.
[2] In his endorsement, Justice Ray wrote this:
Both parties are in agreement that a meeting of the members of the Respondent is necessary in order to deal with membership issues, by-laws, and other decisions taken by the Respondent’s Board of Directors. Many of these decisions were taken without regard for procedural safeguards and contrary to certain statutory and regulatory provisions.
[3] The parties did not argue the merits of the application on that date and I cannot conclude that Justice Ray arrived at any definitive conclusion with regard to the legality of the actions taken by the OSPCA Board. He certainly appears to have expressed a preliminary view on this matter and suggested at the outset that there be a meeting of the OSPCA membership in order to give the members an opportunity to “constructively deal with most, if not all, of the concerns and issues before (him) as they relate to the Board of Directors and governance issues.”
[4] Justice Ray did not give any further directions with respect to the conduct of the meeting other than that it had to be held between November 21 and 25, 2016 and in accordance with by-law 9. He suspended the operation of by-laws 10 and 11, including the disaffiliation of the Applicant Ottawa humane Society (OHS), and he declined to stay the suspension of the agents employed by the OHS. He remained seized of the application and indicated that any concerns could be raise with him on the resumption of argument.
[5] The meeting did go ahead and a new by-law 12 was lawfully passed at the Annual General Meeting (“AGM”) held November 24, 2016. By-law 12 changed the OSPCA governance model from an open-membership to a closed-membership model, one with voting rights in favour of the Board of Directors. The AGM was well-attended. The majority of the affiliate members who are not parties to this application, voted in support of this change in the governance model. There is no dispute that all statutory and former by-law requirements were met in passing by-law 12. There is no complaint raised about the AGM, and no dispute that the OSPCA fully complied with the Court’s endorsement dated October 17, 2016.
[6] Justice Ray’s belief that the results of that meeting would constructively deal with most, if not all, of the concerns raised in the application proved to be overly optimistic. Notwithstanding the vote at the AGM, the remaining Applicants pursued their application arguing that the new by-law 12 was invalid; disputing the continued suspension of OHS’s enforcement agents; and opposing the enforceability of a nonsuit clause in the OSPCA’s Funding Agreement. The OSPCA was completely successful in resisting those claims.
The Position of the Applicants
[7] The Applicants rely on the Court’s absolute and unfettered discretion in respect of costs as recognized in s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 and in Rule 57 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
[8] Despite divided success, the Applicants submit that they are entitled to costs because many of the issues raised in the application were public interest issues; they were successful on some issues; or the merits of their position on some issues was effectively conceded by the Respondents.
[9] The Applicants claim success before Justice Ray in that he suspended the operation of the OSPCA by-law numbers 10 and 11, stayed the suspension of OHS’s affiliation and ordered a new AGM of the OSPCA to be held in accordance with by-law number 9.
[10] The Applicants note that the Court was not required to address some of the relief sought by them because the OSPCA agreed to remove or modify various by-law provisions that had been challenged by them and provided information that had previously been withheld or had been provided with insufficient notice.
[11] In the alternative, the Applicants argue that the costs may be apportioned in accordance with the outcome of each step of the litigation pursuant to rule 57.01(4). Using this approach, the Applicants submit that they should be awarded costs incurred up until the AGM ordered by Justice Ray; that each party bear their costs for the adjournment before Justice MacLean, and that the costs of the final hearing be awarded to the Respondents.
[12] In the further alternative, the Applicants submit that the success is divided and each party should bear its costs.
Position of the Respondents
[13] The Respondents’ maintain that they were fully successful in opposing the application. More importantly, they argue that the closed board governance model, which was the primary complaint of the Applicants, was approved by members of the OSPCA and also endorsed by the Court.
[14] They seek their costs on a partial indemnity scale in the amount of $250,000, inclusive of all fees, disbursements and taxes. They rely on the factors set out in rule 57.01.
[15] They add that donor dollars have been invested by both the Applicants and by the OSPCA all of which are charities. The OSPCA maintains that it had no option but to respond to the serious allegations raised in the application and that it now has a responsibility to its donors to pursue a reasonable recovery of the funds required to respond to this governance challenge.
[16] They reject the Applicant’s submission that the OSPCA used government sourced funds, at least in part, to fund this litigation. They assert that no government funds were expended by OSPCA in this matter. They state that all funds provided by the government are earmarked for specific animal welfare initiatives.
[17] They deny that this application can be considered public interest litigation in that the Applicants cannot be considered public interest litigants simply because their charitable entities.
[18] They argue that their costs are reasonable and are comparable to the time and resources invested by Applicants’ counsel.
A Secondary Issue
[19] The Animal Welfare Agency South Central Ontario (AWASCO), one of the original Applicants, also provided written submissions along with the affidavit of Ross Wells, Chair of the Board of AWASCO. They cite paragraph 21 of my Reasons where I noted that AWASCO had withdrawn from the application.
[20] According to Mr. Wells, he believed that after the vote on November 24, 2016, AWASCO’s proposal that it withdraw from the application on a without costs basis was accepted by the OSPCA. He submits that the evidence and representations support a finding that there was a settlement between AWASCO and OSPCA. AWASCO asks that I confirm that settlement by ordering that no costs be awarded for or against AWASCO.
[21] In the alternative, AWASCO claims success at the appearance before Justice Ray. Its delegates participated in the membership meeting and accepted the will of the membership and sought to withdraw from the application after by-law 12 was properly passed. AWASCO submits it could have sought costs from the OSPCA resulting from their original involvement before Justice Ray, but in seeking to withdraw from the application as of the date of the hearing before me, it would be just to now allow them to withdraw on a without costs basis.
[22] They seek a separate and specific costs order that there be no costs paid or payable to AWASCO.
[23] On this issue, the Respondents submit that it is not necessary for me to address the status of the individual Applicants on the issue of costs. They seek a costs award against the Applicants. They submit that the funding of any costs award is a matter amongst the Applicants and not an issue that requires a ruling by the Court.
Conclusion
[24] I accept the Applicants’ argument that the costs should be apportioned in accordance with the outcome of each step of the litigation, although I arrive at different result.
[25] While the Applicants claim success on their appearance before Justice Ray, I cannot conclude that he made a definitive ruling that the Board of Directors of the OSPCA did not have the authority to revoke by-law 9 and replace it with either by-law 10 or by-law 11. His endorsement reflects that he asked counsel at the beginning of argument for their submissions on the question of adjourning the application so that a meeting of the members could take place. He accepted the agreement of the parties that a meeting of the members was necessary in order to do with the outstanding issues and the decisions taken by the Board of Directors. He did not declare by-laws and 10 and 11 to be invalid; he simply stayed their operation including the disaffiliation of the Applicants. He refused to stay the termination of OHS’s enforcement agents. The application was not argued and was adjourned, and as it turned out, Justice Ray was unable to remain seized as he originally intended.
[26] According to the affidavit of Kate MacDonald, the Chief Executive Officer of the OSPCA, the OSPCA believed it had an inherent right to briefly suspend its affiliates and amend its by-laws. It had done so in the past. The OSPCA did not initially believe that the alternative option, which was to call a special member’s meeting, would have been unproductive given the history of disruptive behaviour on the part of the Applicants. The OSPCA was concerned that this would have attracted media interest and could have frustrated OSPCA’s current and future funding.
[27] Given the history between these parties, the OSPCA could have reasonably anticipated a negative reaction on the part of some affiliates and should not have been surprised by the resulting litigation. This dispute should have been resolved out-of-court, but this litigation was probably inevitable. Given the agreement of counsel to adjourn the application and to conduct the AGM, I am satisfied that each party anticipated the risks of moving forward. The parties took strong, principled, but divergent views; and for that reason, I conclude that they should bear their own costs up to that date. This should address any concerns raised by AWASCO as it did not take part in the litigation beyond that point.
[28] It is also appropriate that each party should bear their costs for an adjournment before Justice MacLean.
[29] I conclude, however, that the Respondents are entitled to their costs for the arguing the application before me. The vote at the AGM meeting should have brought this litigation to an end. The parties had agreed to adjourn the application for that purpose. The Applicants’ continued attack on the OSPCA was unreasonable. The Applicants failure to accept the results of the vote supports the OSPCA’s original concerns that a special meeting of the membership would have been unproductive.
[30] Furthermore, I do not believe that the Applicants can protect themselves from an award of costs by claiming their application to be public interest litigation. The Applicants rely on Thompson v. Ontario (Attorney General), 2013 ONSC 6357, 118 O.R. (3d) 34 and Lancaster v. St. Catharines (City) Compliance Audit Committee, 2013 ONSC 7631. The case law regarding costs in public interest litigation and the determination of who is a public interest litigant was thoroughly discussed by Perrell J. in Incredible Electronics Inc. v. Canada (Attorney General), (2006), 2006 17939 (ON SC), 80 O.R. (3d) 723. At paragraph 59 he said:
… The applicants’ focus of attention was on public interest litigation, which I will define as litigation that involves the resolution of a legal question of importance to the public as opposed to private-interest litigation, which I will define as litigation that involves the resolution of a legal question of importance mainly only to the parties…
[31] He concluded that the Applicants before him would not be subject to the normal costs regime (the loser pays) if they could satisfy the Court that they were public interest litigants. He went on to hold at paragraphs. 90 and 91:
90 Naturally enough and by definition, public interest litigation needs to have a public interest litigant. One of the major, if not the major question in the case at bar, is whether any of the applicants qualify as public interest litigants.
91 One trait of a public interest litigant seems obvious. A public interest litigant, at a minimum, must, in a dispute under the adversary system, take a side the resolution of which is important to the public. There is much more to being a public interest litigant because a private interest litigant may also take a side in dispute important to the public, but one necessary trait of a public interest litigant is that he or she be a partisan in a matter of public importance. In British Columbia (Minister of Forests) v. Okanagan Indian Band, supra, at para. 38 LeBel J. noted that in determining whether public interest litigants deserved special treatment with respect to costs, a factor was the nature and significance of the issues for which they were partisans. He stated:
[T]he more usual purposes of costs awards are often superseded by other policy objectives, notably that of ensuring that ordinary citizens will have access to the courts to determine their constitutional rights and other issues of broad social significance. Furthermore, it is often inherent in the nature of cases of this kind that the issues to be determined are of significance not only to the parties but to the broader community, and as a result the public interest is served by a proper resolution of those issues.
[32] In my view, the Applicants do not qualify as public interest litigants. The fact that they are charitable entities, while a relevant consideration, is not sufficient to qualify them as public interest litigants. While they refer to the police powers of the OSPCA in respect of animal welfare, the focus of this application was a challenge to the governance of the OSPCA and its relationship with these affiliates. This was not a dispute involving charitable services provided to the public nor was it ultimately a question of animal protection. The items agreed to by the OSPCA could have been resolved through correspondence.
[33] No issue of public importance was engaged in this litigation. The validity of a closed governance model for charities was recognized in the Ontario Law Reform Commission, Report on the Law of Charities.[^1] There was a high degree of self-interest on the part of the Applicants in their pursuit of a particular governance model that favoured their control of the OSPCA.
[34] The broad scope of the original application necessitated the exchange of multiple affidavits, productions in cross-examination of six witnesses. Although the scope of the application was narrowed by May 12, 2017, additional materials and supplementary factums were required in addition to all of the materials that were originally filed. For these reasons, I refuse to limit any costs award to solely the costs of the appearance before me on May 12, 2017.
[35] Regrettably, donor dollars have been expended in this litigation and my decision on costs will simply move charitable donations from one balance sheet to another. In their costs outline, the Applicants reported over $220,000 in fees and disbursements. The Respondents incurred fees that are at least twice that amount.
[36] I am mindful of the factors set out in rule 57.01 and conclude that the OSPCA is entitled to a reasonable recovery of funds that it has spent in this litigation and is entitled to a costs award of $100,000 payable by all of the Applicants other than AWASCO.
Mr. Justice Robert N. Beaudoin
Released: December 21, 2017
CITATION: Ottawa Humane Society v. Ontario Society for the Prevention of Cruelty to Animals, 2017 ONSC 7523
COURT FILE NO.: 16-69432
DATE: 20171221
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
OTTAWA HUMANE SOCIETY, HAMILTON/BURLINGTON SPCA, WINDSOR-ESSEX COUNTY HUMANE SOCIETY, CAMBRIDGE AND DISTRICT HUMANE SOCIETY, OAKVILLE & MILTON HUMANE SOCIETY, LONDON HUMANE SOCIETY and ANIMAL WELFARE AGENCY SOUTH CENTRAL ONTARIO
Applicants
-and-
ONTARIO SOCIETY FOR THE PREVENTION OF CRUELTY TO ANIMALS and the Chief Inspector of the OSPCA
Respondents
decision on costs
Beaudoin J.
Released: December 21, 2017
[^1]: Ontario Law Reform Commission, Report on the Law of Charities (Toronto, 1996), Vol. 2, p. 486,