Court File and Parties

COURT FILE NO.: CV-18-00601537-0000

DATE: 20220525

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: K.J., Plaintiff

AND:

THE REGIONAL MUNICIPALITY OF HALTON and TAD ALBERT NELSON, Defendants

BEFORE: VERMETTE J.

COUNSEL: Barry L. Yellin and Kayla A. Carr, for the Defendant Tad Albert Nelson

Doug Smith, for the Defendant The Regional Municipality of Halton

HEARD: In writing

ENDORSEMENT AS TO COSTS

[1] On April 8, 2022, I released an endorsement granting the motion of the Defendant Tad Albert Nelson for a permanent stay of this action and the crossclaim of the Regional Municipality of Halton (“Halton”) as against him (2022 ONSC 2199).

[2] Because of my ruling on the stay motion, I did not decide Halton’s motion for summary judgment, which had become moot. Both motions had been ordered to be heard together by Justice Chalmers, with the stay motion proceeding first.

[3] The parties were not able to agree on costs and have delivered costs submissions.

Positions of the parties

a. Position of Mr. Nelson

[4] Mr. Nelson is seeking costs for both the stay motion and Halton’s motion for summary judgment as follows:

a. costs of the stay motion on a substantial indemnity basis in the amount of $28,714.89;

b. costs of the motion for summary judgment on a substantial indemnity basis in the amount of $43,983.46; and

c. costs in the amount of $500.00 to prepare his costs submissions,

for a total of $73,198.35.

[5] With respect to the costs of the motion for summary judgment, Mr. Nelson submits that in light of the order that the two motions proceed together, he was obligated to expend significant costs to respond to the motion for summary judgment, including retaining an expert, which ultimately proved to be unnecessary.

[6] Mr. Nelson states that he made two offers to settle the action, and he obtained a more favourable outcome on the motion than either of his offers. On September 23, 2020, he served a Rule 49 Offer to Settle whereby he offered to pay $250,000 to Halton, among other things. On January 28, 2021, he served a “common law offer to settle” that temporarily superseded his Rule 49 Offer to Settle, whereby he offered to pay Halton the all-inclusive sum of $275,000.00, among other things. The second Offer to Settle expired on February 10, 2021. Mr. Nelson relies on Rule 49.13, which states that the court, in exercising its discretion with respect to costs, may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer.

[7] Mr. Nelson points out that the sum that he is seeking is well below the reasonable expectation of Halton in light of Halton’s costs outline which shows partial indemnity costs for both motions in the amount of $94,252.43, and substantial indemnity costs in the amount of $113,944.26.

b. Position of Halton

[8] Halton’s position is that both sides should bear their own costs of the underlying motions. In the alternative, it submits that Mr. Nelson is entitled at the most to his partial indemnity costs of the stay motion only.

[9] Halton argues that notwithstanding Mr. Nelson’s “technical success” on the stay motion, it would bring the administration of justice into disrepute to award any costs to Mr. Nelson as he sexually assaulted a vulnerable young woman in his care. Halton submits that the entire litigation was the direct and predictable result of Nelson’s own criminal conduct and that the action has been stayed as against him due to a procedural irregularity.

[10] Halton states the following in its costs submissions:

Halton chose to settle this litigation vis-à-vis K.J. at an early stage, in part in order to spare her further trauma, and then to take the risk of trying to recover the settlement amount from Nelson. For reasons made clear in the endorsement, that attempt proved unsuccessful. But in these circumstances, it would be unfair to penalize Halton a second time by forcing it to pay the costs of the ultimate wrongdoer. This Court retains the authority under Rule 57 and the Courts of Justice Act to decline to award costs to a successful party, including to punish that party for its prelitigation conduct. […]

[11] According to Halton, since it stepped into the Plaintiff’s shoes, it is entitled to the benefit of the Victims’ Bill of Rights, S.O. 1995, c. 6 (“VBR”). It refers to the preamble and subsections 4(2) and 4(6) of the VBR.

[12] Halton submits that Mr. Nelson has not made any offers that attract costs consequences under Rule 49. If further submits that this is not an appropriate case to otherwise factor offers to settle into the disposition of costs as Halton made its own offer and both parties made good faith efforts to resolve the litigation until Mr. Nelson took the position that the action should be stayed.

[13] Halton argues that Mr. Nelson is not entitled to his costs of the motion for summary judgment. It states that Mr. Nelson was not successful on that motion as it was never decided by the court. Halton submits that in a situation where both parties bring motions that are heard together and the outcome of one motion renders the other moot, the general practice is not to award any costs in respect of the second motion.

[14] Halton’s position is that there is no justification for awarding substantial indemnity costs in the circumstances of this case.

Discussion

a. Costs of the motion for summary judgment

[15] In my view, Mr. Nelson is not entitled to his costs of the motion for summary judgment. I did not decide this motion and, as a result, there is no successful party. I agree with Halton that the general practice is not to award any costs in respect of a motion that has been rendered moot as a result of another motion heard at the same time: see, e.g., 1013799 Ontario Limited v. Kent Line International Limited, 2000 CanLII 16926 at para. 6 (Ont. C.A.) and Nordik Windows Inc. v. Aviva Insurance Company of Canada, 2022 ONSC 1217 at para. 1.

[16] Given my conclusion that it is not appropriate to award costs of the motion for summary judgment, these costs are not claimable in the action: Sioux Lookout v. The Attorney General, 2010 ONSC 3721 at paras. 24-25.

b. Costs of the stay motion

[17] Mr. Nelson was successful on the stay motion and is entitled to his costs.

[18] I reject Halton’s submission that it would bring the administration of justice into disrepute to award any costs to Mr. Nelson in light of his criminal conviction. In this action, Mr. Nelson admitted to his actions against the Plaintiff, for which he has been criminally punished. However, he disputed the quantum of damages sought against him. His position on this issue was not frivolous. As noted in my endorsement at paragraph 77, “this case cannot be looked at only through the liability lens. Damages are a significant issue.”

[19] Further, Halton’s argument that Mr. Nelson’s success was “technical” and the result of a “procedural irregularity” shows a failure on its part to understand the importance of the disclosure obligation that it breached in this case. The Court of Appeal has reiterated a number of times that a failure to comply with the obligation to disclose immediately a litigation agreement that changed the litigation landscape amounts to an abuse of process and must result in consequences of the most serious nature for the defaulting party.

[20] Finally, I find that the VRB is irrelevant in the context of this motion. Whether or not Halton, as assignee of the Plaintiff’s claim, could be considered a “victim” under the VRB (which I highly doubt), the VRB does not provide that victims do not have to pay costs if they are unsuccessful on a motion. The provisions referred to by Halton deal with motions for security for costs and awards of costs in favour of a victim, none of which apply in this case.

c. Scale of costs

[21] As has been observed in many cases, costs on the elevated scale are exceptional and are reserved for those situations when a party has displayed reprehensible, scandalous or outrageous conduct: see Quickie Convenience Stores Corp. v. Parkland Fuel Corporation, 2021 ONCA 287 at para. 4. There was no such conduct on the part of Halton in this case.

[22] In Davies v. Clarington (Municipality), 2009 ONCA 722 at para. 40, the Court of Appeal stated that: (a) the judicial discretion under Rules 49.13 and 57.01 is not so broad as to permit a fundamental change to the law that governs the award of an elevated level of costs; and (b) apart from the operation of Rule 49.10, elevated costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made. Given that Rule 49.10 is not triggered in this case, the appropriate scale of costs is partial indemnity.

[23] While, pursuant to Rule 49.13, I can take the offers to settle made by the parties into account when exercising my discretion to award costs on a partial indemnity basis, they do not have a practical impact on the issue of quantum in the circumstances of this case.

d. Quantum

[24] The amount of costs sought by Mr. Nelson for the stay motion on a partial indemnity basis is $21,958.44. I have reviewed Mr. Nelson’s costs outline and I find that the time spent, the partial indemnity rates, the delegation of work and the costs sought are generally reasonable in the circumstances. The reasonableness of the amount sought by Mr. Nelson on a partial indemnity basis is confirmed by the fact that Halton’s costs outline for the stay motion reflects a slightly higher amount on a partial indemnity basis: $22,195.16. However, some of the time included in Mr. Nelson’s costs outline for the stay motion relates to the motion for summary judgment and should be excluded. As a result, I will apply a small reduction.

Conclusion

[25] 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 in favour of Mr. Nelson for the stay motion is on a partial indemnity basis in the all-inclusive amount of $19,000.00. In my view, this is an amount that Halton should reasonably have expected to pay in the event that it was unsuccessful on the motion.

[26] Accordingly, I order that Halton pay to Mr. Nelson his costs of the stay motion in the all-inclusive amount of $19,000.00 within 30 days.

Vermette J.

Date: May 25, 2022