COURT FILE NO.: CV-20-00652590-0000
DATE: 20210927
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MANNING DEVELOPMENTS INC.
Applicant
– and –
THE CORPORATION OF THE TOWN OF LAKESHORE
Respondent
William A. Chalmers, for the Applicant
Brendan van Niejenhuis and Caitlin Milne, for the Respondent
HEARD: In writing
ENDORSEMENT AS TO COSTS
VERMETTE J.
[1] On September 1, 2021, I released Reasons for Judgment dismissing the Applicant’s application and motion for leave to file fresh evidence. The parties were not able to agree on costs and have delivered costs submissions and bills of costs.
Positions of the parties
a. Position of the Respondent
[2] The Respondent submits that costs should follow the event. It seeks costs on a substantial indemnity basis in the amount of $110,654. In the alternative, it asks for partial indemnity costs in the amount of $73,769.
[3] The Respondent’s position is that this is a case warranting substantial indemnity costs. It argues that the Applicant ought to have known that the application could not succeed. It also argues that the Applicant’s conduct of the litigation exacerbated its complexity and cost throughout. The Respondent states the following in support of its position:
This reckless and irresponsible manner of conducting litigation – rushing forward a meritless proceeding, claiming urgency when none exists, abusing the right of reply so as to lay an ambush on the central issues, improperly refusing to be questioned on the evidence tendered, dishonouring clear undertakings, and bringing disruptive post-hearing motions – should attract the rather modest sanction of substantial indemnity costs.
[4] The Respondent also refers to the fact that the Respondent is a public body and that extensive staff time was consumed in relation to this litigation while staff are already overburdened as a result of the pandemic.
[5] With respect to the motion for leave to file fresh evidence, the Respondent acknowledges that its letter (i.e. the fresh evidence) was confusing, but it states that its counsel wrote promptly to the Applicant’s counsel to clarify any misapprehension. It submits that the Applicant reacted with an unnecessary and unmeritorious post-hearing motion, and it points out that the “fresh evidence” was held to be irrelevant.
b. Position of the Applicant
[6] The Applicant does not dispute that costs should follow the event with respect to the application. However, it submits that this is not a case for substantial indemnity costs as elevated costs are only warranted where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties. The Applicant’s position is that there has been no such conduct in this litigation and that there is simply no justification for substantial indemnity costs.
[7] The Applicant states that it was not a foregone conclusion that the application would be unsuccessful. It also provides some explanation for its “fulsome Reply Affidavits” and its lengthy Reply Factum.
[8] With respect to the motion for leave to file fresh evidence, the Applicant argues that the motion was necessary as the Court found that the letter was “anything but clear and hopelessly confusing in light of the record on this Application”. It submits that a fair disposition would be that each party bear its own costs of the motion.
[9] As for quantum, the Applicant accepts as reasonable the partial indemnity rate of Mr. van Niejenhuis ($325), but it argues that the number of hours spent by counsel for the Respondent on the application (173 hours) was excessive compared to the number of hours spent by counsel for the Applicant (115 hours). The Applicant’s position is that anything above 115 hours is beyond the reasonable expectations of the Applicant as the losing party. Accordingly, the Applicant submits that an appropriate costs award is an order that the Applicant pay the Respondent’s costs on the partial indemnity scale in the all-inclusive amount of $40,000 (115 hours x $325 + disbursements).
[10] The Applicant’s own costs of the application (excluding the motion) on a partial indemnity basis, as reflected in its bill of costs, total approximately $60,000. For the same number of hours, it is significantly higher than the $40,000 proposed for the Respondent as the partial indemnity rate of counsel for the Applicant is higher ($450).
Discussion
[11] I find that the Respondent is entitled to its costs of the application on a partial indemnity basis, but that there should be no costs of the motion for leave to file fresh evidence.
[12] With respect to the issue of scale, the fact that a party’s position has little merit or is ultimately unsuccessful is no basis for awarding substantial indemnity costs: see Krieser v. Garber, 2020 ONCA 699 at para. 137. Substantial indemnity costs are only warranted in rare and exceptional cases where a party has engaged in behaviour worthy of sanction, such as where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties: Davies v. Clarington (Municipality), 2009 ONCA 722 at paras. 28-33. In my view, although some aspects of the conduct of the litigation raise concerns, such as the manner in which the right of reply was exercised, the conduct of the Applicant in this case does not rise to the egregious level required to award costs on a substantial indemnity basis. Hard-fought litigation that turns out to have been misguided is insufficient to justify an elevated costs award: see Davies v. Clarington (Municipality), 2009 ONCA 722 at paras. 42-46.
[13] With respect to the motion for leave to file fresh evidence, I agree with the Applicant that each party should bear their own costs. While the Applicant was unsuccessful on its motion, and while I found that any differential treatment between the Applicant and Beachside Developments Inc. (“Beachside”) by the Respondent was ultimately irrelevant, it is my view that there should be no costs of the motion because: (a) as noted in my Reasons for Judgment, the letter in issue, which was co-signed by the Respondent’s affiant on the application, was hopelessly confusing in light of the record on this application; (b) the Respondent did not disclose the letter to the Applicant, even though both parties addressed Beachside’s development in their evidence; and (c) I rejected the Respondent’s “explanation” or submission that the treatment plant capacity was not an issue in the context of the Applicant’s application to Council, and that only conveyancing/sewer capacity was in issue.
[14] Turning to the issue of quantum, the amount of costs sought by the Respondent must be reduced to take into account the fact that I have declined to grant costs of the motion for leave to file fresh evidence. Further, I note that, as a general rule of thumb, partial indemnity rates are 60% of full indemnity rates: see James v. Chedli, 2020 ONSC 4199 at para. 14. The partial indemnity rates used for two of the lawyers of the Respondent (not Mr. van Niejenhuis) represent 75% and 69% of their actual rates. As a result, a slight reduction must be applied.
[15] I reject the Applicant’s submission that anything above 115 hours is beyond the reasonable expectations of the Applicant as the losing party. The number of hours is only one factor to consider while assessing the reasonableness of costs. Here, I note that the Applicant’s costs on a partial indemnity basis are in the amount of $60,000. I also note that more junior lawyers are listed on the bill of costs of the Respondent. While it may take them more time to accomplish a task, their hourly rate is lower. Further, it is my view that it should have been within the reasonable expectations of the Applicant that, in light of the nature of the application and the fact that the Respondent is a public body, a significant amount of time would be required to respond to the application. Nevertheless, I am of the view that the total number of hours spent by the Respondent’s lawyers on the application exceeds what could be reasonably expected in this case, but not to the extent argued by the Applicant.
Conclusion
[16] Taking the foregoing into account, as well as the factors set out in Rule 57.01(1) of the Rules of Civil Procedure, I find that the fair and reasonable award of costs on a partial indemnity basis in favour of the Respondent is in the all-inclusive amount of $50,000.00. In my view, this is an amount that the Applicant should reasonably have expected to pay in the event that it was unsuccessful on the application, especially in light of the amount of its own bill of costs.
[17] Accordingly, I order that the Applicant pay to the Respondent its costs of the application in the all-inclusive amount of $50,000.00 within 30 days.
Vermette J.
Released: September 27, 2021