2019 ONSC 4316

COURT FILE NO.: CV-19-00000152-0000

DATE: 2019/07/16

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Hydro One Networks Inc., Plaintiff/Moving Party

AND:

The Haudenosaunee Confederacy Chiefs Council, Haudenosaunee Development Institute, Todd Williams, Colin Martin, Rhonda Martin, Hayley Doxtator, Jill Styres, John Styers, Matt Myke, Jaqueline House, Joleen Bomberry, Ryan Burnham, Tom Keefer, Colleen Davis, Kyle Harris, Bobby Jo Johnson, Joleen Johnson, Cary Johnson, John Doe, Jane Doe and persons unknown, Defendants/Respondents

BEFORE: D.A. Broad

COUNSEL: Christopher D. Bredt and Maureen Doherty, for the Plaintiff Scott C. Hutchison, for the Defendant Haudenosaunee Development Institute No one appearing for the remaining defendants

HEARD: July 15, 2019

costs ENDORSEMENT

Background

[1] The plaintiff Hydro One Networks Inc. (“Hydro One”) brought a motion for an interim and Interlocutory injunction against the defendants returnable on Monday July 8, 2019. The motion was served on the defendants the Haudenosaunee Confederacy Chiefs Council (“HCCC”) and Haudenosaunee Development Institute (“HDI”) and on at least two of the individual defendants, at midday on Friday July 5, 2019.

[2] The purpose of the injunction was to allow the plaintiff to complete the new transmission facilities in the Niagara Region known as the Niagara Reinforcement Project (“NRP”) free from interference or obstruction by the defendants. A full review of the background facts to the injunction application, derived from Hydro One’s motion materials, was set forth in Justice Sheard’s Reasons for Decision referred to below.

[3] At the return of the motion before Justice Sheard the defendant HDI was represented by counsel. As noted by Justice Sheard, HCCC was not represented by counsel but a lawyer, Aaron Detlor, sought to act as amicus and to assist HCCC, which he advised does not attorn to Canadian jurisdiction and does not retain counsel.

[4] None of the individual defendants who identified themselves as being in attendance on the return of the motion namely Todd Williams, Colin Martin, Rhonda Martin, Jaqueline House, Colleen Davis, Joleen Bomberry and Gary Johnson were represented by counsel and none of them sought to participate in the hearing.

[5] HDI asked for an adjournment to file responding materials and to conduct cross-examinations. Hydro One and HDI agreed that the motion should be returnable on July 15, 2019 and agreed upon a timetable for the delivery of responding and reply materials and to conduct cross-examinations. Justice Sheard made an order implementing the timetable agreed to by Hydro One and HDI.

[6] At the request of Hydro One and following submissions Justice Sheard granted an interim and interlocutory injunction pending the adjournment on the basis sought by Hydro One with an additional paragraph requested by HDI, with reasons to follow. She released her Reasons for Decision on July 10, 2019.

[7] None of the defendants filed responding materials and no cross examinations were conducted on the affidavits filed by Hydro One in support of the injunction motion.

[8] By letter dated July 12, 2019 counsel for HDI advised the Court that it would not oppose Hydro One’s seeking of an injunction on the return date of July 15, 2019 and would be taking the position that no costs should be awarded against it.

[9] On the return of the motion on July 15, 2019 Mr. Hutchison confirmed that HDI did not oppose the granting of an interlocutory injunction on the same terms as set forth in the order of Justice Sheard and submitted that no costs should be awarded against HDI. I canvassed those in attendance in the courtroom, none of whom identified themselves as defendants, and no one in attendance in the courtroom identified themselves as representing any defendant other than HDI. I thereupon granted an interlocutory injunction until the trial of the proceeding on substantially the same terms as set forth in the order of Justice Sheard and for the reasons set forth in her Reasons for Decision.

[10] Counsel for Hydro One and for HDI made oral submissions on costs. The following is my disposition with respect to the question of costs of the injunction motion.

Position of Hydro One

[11] Mr. Bredt for Hydro One argued that costs should follow the event and that an award of costs on a partial indemnity basis should be made against each of the named defendants. However, on the issue of quantum, he distinguished between three categories of defendants, firstly, the institutional defendants HCCC and HDI, secondly, two individual defendants who he submitted were the leaders involved in the interference with completion of the NRP, and thirdly, the remaining individual defendants whose involvement was restricted to their personal attendance at the worksite on one or more of the relevant dates, particularly April 29, 2019 and July 4, 2019.

[12] Mr. Bredt submitted that costs should be awarded against HCCC and HDI fixed in the amount of $75,000, representing approximately 50% of the total partial indemnity costs described in Hydro One’s Costs Outline. He submitted further that costs should be awarded against Mr. Williams and Mr. Martin in the sum of $25,000 and nominal costs in the amount of $2,000 against each of the remaining individual defendants.

[13] Mr. Bredt advised the court that Hydro One is prepared to provide an undertaking to the court that payment of costs will be waived as against HCCC and HDI if the purported “cease and desist” issued by HCCC is lifted and the NRP is completed on or before September 1, 2019. It is also prepared to provide a similar undertaking to waive costs as against Messrs. Williams and Martin provided they comply with the injunction order and the NRP is completed by September 1, 2019 and as against the remaining defendants provided they comply with the injunction order.

[14] Mr. Bredt submitted that Hydro One had been engaged in meetings, discussions and correspondence with HCCC and HDI respecting the NRP for some fifteen years, and in particular was engaged in intensive discussions in 2019 following issuance of the “cease and desist” by HCCC. Hydro One made it clear that if the situation involving the interference with and blockades of the worksites was not resolved it would be required to commence court proceedings seeking injunctive relief, being the only remedy available to it. Accordingly, HCCC and HDI were not caught by surprise by the commencement of proceedings and the bringing of the injunction motion. Although he acknowledged that no specific communication was made to HCCC and HDI that costs would be sought in the event that legal proceedings were brought, that fact should have been within their reasonable expectation, given their experience of involvement in similar legal proceedings in the past.

Position of HDI

[15] Mr. Hutchison, on behalf of HDI, submitted that the motion was, for practical purposes, akin to an ex parte interim for an interlocutory injunction, given the short service of the voluminous motion materials. He noted that HDI was in no position to conduct a meaningful review of Hydro One’s materials in advance of the hearing on July 8 and the position that it took on the return of the motion on that date was reasonable. On this basis rule 57.03(3), which provides that if a motion is made without notice the moving party is not entitled to costs unless the court orders otherwise, should apply or should be applied by analogy. Given the reasonable position taken by HDI on the initial return date of July 8, 2019 and the reasonable position that it took thereafter in not opposing the continuation of the injunction, Mr. Hutchison argued that no costs should be awarded against HDI in respect of the initial return of the motion, notwithstanding that Hydro One was successful in obtaining the injunctive relief it sought.

[16] Mr. Hutchison submitted in the alternative that the proper order would be to reserve costs to the trial judge or make an order of “costs in the cause” on the basis that there has been no final determination of the rights of the parties but rather the injunction order was made in order to protect Hydro One’s position pending trial.

[17] Although Mr. Hutchison does not take issue with the hourly rates for counsel and clerk time set forth in Hydro One’s Costs Outline, he submits that the time claimed in the Costs Outline in the range of 500 hours is grossly excessive in the circumstances and are well beyond what would have been within the reasonable expectation of HDI.

Guiding Principles on Costs Generally

[18] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended, provides that "subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the cost shall be paid."

[19] The factors to be considered by the court, in the exercise of its discretion on costs, are set forth in sub-rule 57.01(1), including in particular the principle of indemnity at para. (0.a) and the amount of costs that an unsuccessful party could reasonably expect to pay at para. (0.b).

[20] It is well known that the overall objective in dealing with costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful party. The expectation of the parties concerning the quantum of costs is a relevant factor to consider. The court is required to consider what is "fair and reasonable" having regard to what the losing party could have expected the costs to be (see Boucher v. Public Accountants Council (Ontario), 2004 14579 (ON CA), [2004] O.J. No. 2634 (Ont. C.A.) at para. 26 and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC, 2005 1042 (ON CA), [2005] O.J. No. 160 (Ont. C.A.)).

[21] Importantly, the case law directs that a costs award must represent a fair and reasonable amount that should be paid, rather than an exact measure of the actual costs, must be consistent with what the unsuccessful party might reasonably have expected to have to pay, and must reflect some form of proportionality to the actual issues argued, rather than an unquestioned reliance on billable hours and documents created (see Mason v. Smissen, [2013] O.J. No. 4229 (Ont. S.C.J.) at paras. 5 and 6 and the cases therein referred to).

[22] The usual rule in civil litigation is that costs follow the event and that rule should not be departed from except for very good reasons (see Gonawati v. Teitsson [2002] CarswellOnt 1007 (Ont. C.A.), 2002 41469 and Macfie v. Cater, 1920 401 (ON SC), [1920] O.J. No. 71 (Ont. H.C.) at para 28).

Application of Rule 57.03(3)

[23] I do not accede to the submission that rule 57.03(3), which is applicable to motions made without notice, should govern the cost disposition in the present case. The rule is stated to apply where no notice is given. It is not stated to apply where an order is made on short service. In the circumstances as set forth in Hydro One’s motion material Justice Sheard was satisfied that the granting of injunctive relief on an interim basis pending the adjournment sought by HDI was warranted, notwithstanding the short service. The fact is that Hydro One did give notice to HDI and HCCC and to at least two of the individual defendants and that seven of them were in attendance. In any event, even if rule 57.03(3) could be considered to apply by analogy, the rule does provide that an order for costs may be made if the court “orders otherwise.”

Should Costs be reserved to the Trial Judge?

[24] Mr. Hutchison for HDI relies upon the oft-cited the decision of Perell, J. in Quizno’s Canada Restaurant Corp. v. 1450987 Ontario Corp., [2009] O.J. No. 2563 (S.C.J.) in support of his submission that the costs of the injunction motion are to be reserved to the trial judge. Justice Perell made reference in that decision to an extract from Justice Robert J. Sharpe’s text Injunctions and Specific Performance at p. 2-91 in which was stated:

“it would be unusual to award costs of an interlocutory injunction motion to the successful plaintiffs prior to trial. As there has been no final determination of the rights of the parties, but rather in order to protect the plaintiff’s position pending trial, the preferable course is to reserve the question of costs to the trial judge.”

[25] It is noted that at para. 12 of Quizno’s Justice Perell stated specifically that “the action at bar is not over, and it remains to be determined whether the plaintiffs will succeed at trial.”

[26] HDI’s Book of Authorities also referenced the case of Rogers Cable T.V. Ltd. v. 373041 Ontario Ltd., [1994] O.J. No. 1087 (Ont. Ct. Gen Div.) where Borins, J. (as he then was) observed at para. 4 that where it is clear that the granting of the interlocutory injunction will put an effective end to the proceedings it is appropriate to fix the amount of costs, whereas in a case where a trial is a “virtual certainty” the court will consider the usual alternatives including reserving the costs to the trial judge.

[27] In contrast to the determinations in Quizno’s and Rogers Cable, the case of Precision Fine Papers Inc. v. Durkin, 2008 CarswellOnt 3219 (S.C.J.) Strathy, J. (as he then was) held that costs should be awarded forthwith based upon findings that:

(a) the plaintiff and not simply established a serious issue to be tried, but also a strong prima facie case;

(b) the misconduct of the defendants was egregious;

(c) the plaintiff had to engage in lengthy and expensive investigations and litigation procedures in order to expose the defendants’ misconduct; and

(d) the plaintiff had been substantially successful on the most important issues related to the injunction motion.

[28] In the case of Verge Insurance Brokers Ltd. v. Sherk, 2013 ONSC 7855 (S.C.J.) Quinn J. conducted a thorough review of the authorities, including Quizno’s and Rogers Cable. He noted at footnote 17 that the reference in Rogers Cable to a situation in which a trial is a “virtual certainty” is assumed to mean on the injunction issue and not in reference to other issues in the action. He also referenced the decision of the Divisional Court in Intercontinental Forest Products SA v. Rugo [2004] CarswellOnt 4172 where it was stated at para. 3 that the Rogers Cable decision does not establish a mandatory rule but rather preserved the residual discretion of the judge with respect to costs and that, in a particular case, the motions judge may determine to award costs for an interlocutory injunction payable forthwith, rather than reserving costs to the trial judge.

[29] The most recent reported case considering the question of whether costs on a successful motion for an interlocutory injunction should be reserved to the trial judge is Amphenol Canada Corp. v. Sandaram, 2019 ONSC 2226 (S.C.J.). At para. 9 Faieta, J., citing Precision Fine Papers, Accreditation Canada International v. Guera, 2017 ONSC 932 ONSC 932 (Div. Ct.) and Intercontinental Forest Products, observed that courts have taken the view that justice does not require a departure from the rule that costs should be payable forthwith where (1) a trial on the issue of liability is not highly probable; (2) the plaintiff has established a strong prima facie case against the defendants; (3) the conduct of the defendant was egregious; (4) the plaintiff had to engage in lengthy and expensive investigations and litigation procedures in order to expose the defendant’s misconduct; and (5) the plaintiff was substantially successful on the most important issues.

[30] In my view the application of these principles supports an order for the immediate payment of costs by the defendants and does not support reserving the issues of costs to the trial judge.

[31] Although it is anticipated that there may be a trial in the case at bar on the issue of damages, it is not likely that a trial will be a “virtual certainty” or even “highly probable” on the injunction issue or on the issue of the liability of the defendants. Hydro One anticipates that, without interference by the defendants, the final work on the NRP will be completed by September 1, 2019. The injunction component of the action will therefore be effectively spent and there will be nothing meaningful to litigate in respect of that form of relief (see Accreditation Canada at para. 11 citing Verge Insurance Brokers).

[32] Justice Sheard found at para. 37 that Ontario Hydro had made out a strong prima facie case. Although she did not make an express finding that the defendants’ conduct was egregious (taken to mean “outrageous”) the use of self-help tactics of the type employed by the defendants in this case has been described to be of such a nature as to bring the administration of justice into disrepute (see Enbridge Pipelines Inc. v. Williams, 2017 ONSC 1642 (S.C.J.) at para. 37 following Moulton Contracting Ltd. v. British Columbia, 2013 SCC 26, [2013] 2 S.C.R. 227 (S.C.C.)). Hydro One has had to engage in lengthy and expensive investigations and litigation procedures in order to respond to the defendants’ misconduct as demonstrated by its motion materials and by its Costs Outline, and it was successful on the most important issues.

Quantum

[33] On the question of quantum, I am hampered by the absence of detailed records of the time expended by counsel for Hydro One in reference to the preparation of the motion materials. However, I do accept that considerable time was spent in that regard which was entirely warranted for Hydro One’s protection. However, as noted above, the overall objective in dealing with costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful party. I find that, in the particular and unique circumstances of this case, a joint and several costs award against HCCC and HDI in the sum of $50,000 inclusive would adequately respond to the objectives of an order for costs and represents an amount that should have been within their reasonable expectations, having been advised that Hydro One intended to seek injunctive relief.

[34] On the basis of the affidavit evidence filed by Hydro One, I accept that Todd Williams and Colin Martin did act in a leadership capacity in mounting and maintaining the blockades of the Hydro One property on the relevant dates and their involvement may therefore be distinguished from that of the remaining individual defendants. I find that they must be taken to have had knowledge of Hydro One’s stated position that it would commence legal proceedings including a claim for injunctive relief unless the interference with its operations was discontinued. I find that a costs award against each of Todd Williams and Colin Martin in the sum of $15,000 inclusive would be fair and reasonable and within their reasonable expectations.

[35] In the exercise of my discretion I decline to make a costs award against the remaining individual defendants. The evidence does not support an inference that they were individually made aware of Hydro One’s position respecting the commencement of legal proceedings. I am not satisfied that the remaining individual defendants had any reasonable expectation of being held personally responsible for costs given the nature of their involvement in the interference with Hydro One’s operations.

Proposed Undertaking to Waive Costs

[36] Mr. Bredt has given the undertakings referred to above on behalf of Hydro One to waive enforcement of the costs awards on the record. I have not been referred to any authority to suggest that such undertakings may be incorporated into an order for costs and I decline to do so. In my view it has the potential of confusing the making of a costs award with the prospect of contempt proceedings resulting from a future non-compliance with the injunction order which may result in unintended consequences.

Disposition

[37] On the basis of the foregoing it is ordered as follows:

(a) The defendants Haudenosaunee Confederacy Chiefs Council and Haudenosaunee Development Institute shall jointly and severally pay costs to the plaintiff fixed in the sum of $50,000.00;

(b) The defendant Todd Williams shall pay costs to the plaintiff fixed in the sum of $15,000.00;

(c) The defendant Colin Martin shall pay costs to the plaintiff fixed in the sum of $15,000.00;

(d) The foregoing amounts shall be paid within 30 days hereof.

D.A. Broad

Date: July 16, 2019