Report to/Rapport au:
Finance and Economic Development Committee
Comité des finances et du développement économique
29 August 2011 / le 29 aout 2011
Submitted by/Soumis par: Kent Kirkpatrick
City Manager / Directeur Municipal
Contact Person/Personne ressource
: M. Rick O’Connor, City Clerk and Solicitor/
Greffier et Chef du contentieux
(613) 580-2424 x21215, rick.oconnor@ottawa.ca
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Ref N°: ACS2011-CMR-LEG-0025 |
SUBJECT:
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OBJET :
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politique sur Le recouvrement des frais judiciaires – Examen |
That the Finance and Economic Development
Committee recommend that City Council repeal the City’s Policy on Seeking Legal Costs.
Que le Comité des
finances et du développement économique recommande au Conseil municipal de
révoquer la Politique sur le recouvrement des frais judiciaires de la Ville.
BACKGROUND
At the City Council
meeting of April 13th, 2011, a direction was given to the City Clerk
and Solicitor in respect of the City’s Policy
on Seeking Legal Costs (the “Costs
Policy”) in litigation cases. The complete text of the direction is set out
below:
That the City Solicitor review
the policy on seeking cost awards as it relates to various cases, including the
Friends of Lansdowne litigation, and provide Council with available options.
Set out below is a
discussion of the origins, effects and possible options for the Costs Policy.
DISCUSSION
On November 26th,
2008, Council referred Motion No. 48/46 to the Corporate Services and Economic
Development Committee for consideration. Briefly, that motion sought the
following two objectives:
1. BE IT RESOVED THAT Council clarify its policy
on seeking cost awards after successfully defending its positions against community
and resident public interest groups;
2. AND THAT the clarification be structured such
that, in disputes in front of tribunals, the City will not seek cost awards
from community or public interest groups unless the presiding judge or tribunal
or Chair of proceedings indicates that the case advanced by the community or
resident public interest group is either frivolous, vexatious or of oblique
motive.
A complete copy of
Motion No. 48/46 is found at Document 1 of this report.
On February 17th , 2009, the Corporate Services and Economic
Development Committee considered the matter in a report entitled, “Motion –
Policy on Seeking Cost Awards”: (ACS2009-CMR-CSE-0001). A full copy of the report is attached as
Document 2.
In short, the
February 2009 Report identified the distinction between cost awards before
administrative tribunals, principally the Ontario Municipal Board (“OMB”), and
the civil courts. Generally speaking, an award of costs by the OMB is exceptional. In fact, the OMB’s own Rules state that it
“may only order costs against a party if the conduct...of a party has
been unreasonable, frivolous, vexatious or if the
party has acted in bad faith.” The OMB’s reluctance to order costs against an
unsuccessful party was exemplified in a decision released in January 2009
involving Kimvar Enterprises. In that
case, the OMB dismissed a developer’s request for $3.2M in costs and accepted
the submissions made by Clayton Ruby on behalf of the intervenor, Environmental
Defence Canada:
The Board agrees with Mr. Ruby’s submission that the Board takes a
cautious approach to cost awards against citizens and strives to accommodate
public participation in land use planning decisions. In fact, in the very limited number of cases
where awards of costs have been made against citizens, amounts have always been
nominal. This is entirely consistent
with how the Board has typically proceeded:
costs cannot be used as a threat to deter public participation; and
costs will only be awarded (whether the parties are commercial entities,
ratepayers or citizens) where the conduct complained of is so improper that it
cannot be ignored [emphasis added].
*****
Nonetheless, there is no question that the claim is unprecedented and
the Board finds that an award of costs anywhere near the amount requested would
create a chilling effect. In this
regard, the Board adopts Mr. Ruby’s submission that the public interest impact
of a cost award is a relevant factor for the Board to consider in exercising
its discretion. It is for this reason
that the Board has restricted awards of costs to the clearest of cases, where
the conduct complained of is unreasonable and improper.
The OMB’s “cautious approach
to cost awards against citizens” is in stark contrast to the court system, where
cost awards are a regular feature of civil litigation. In this latter regard, a
party contemplating a proceeding before the courts has traditionally faced
potential cost consequences, in accordance with the Courts of Justice Act, the Rules of Civil Procedure and the
well-developed body of caselaw that has evolved on the subject.
Despite the
distinction between litigation before administrative tribunals and the courts,
concerns were expressed during consideration of the Report as to the different
approaches taken by each with respect to costs. As a result, on February 25th,
2009, City Council adopted an amended version of the Committee recommendation, which
effectively adopted the OMB’s approach on costs for all litigation involving
the City, including matters before the courts.
As such, the City’s Policy on
Seeking Legal Costs in any litigation currently states as follows:
That Council confirm its policy on seeking
cost awards after successfully defending its positions against community and
resident public interest groups or an individual who is a public interest
litigant such that the City will not seek cost awards from community or
resident groups or an individual who is a public interest litigant before
administrative tribunals and courts unless the case advanced by the community
or resident group or an individual who is a public interest litigant can
reasonably be considered either frivolous, vexatious, in bad faith or an abuse
of process under all of the circumstances of the case, subject to concurrence
by CSEDC; and
That community or resident groups or an
individual who is a public interest litigant that challenge the City in court
also be asked, as part of the litigation, to confirm that they will similarly
not seek costs against the City unless the City has breached any of the above
noted factors.
In essence, the 2009
Costs Policy blends the two tests
that are available before the OMB and the civil courts, respectively, which
determine a party’s entitlement to costs.
This “blending” may cause confusion, as costs in OMB matters are the
exception (i.e. costs will only be granted if the test if met), whereas they
are the rule in the civil courts (i.e. costs will only be refused if the test
is met). In addition, there is no need for a party to be identified as a public
interest litigant in order to avoid costs before the OMB, unlike the civil
courts. In this regard, the courts have developed various factors which help to
determine whether a plaintiff is, in fact, a “public interest litigant”
including: the proceeding involves issues, the importance of which extends
beyond the immediate interest of the parties involved; the litigant has no
personal proprietary or pecuniary interest in the outcome, or if he or she has
an interest, it clearly does not justify the proceeding economically; and, the
issues have not been previously determined by a court in a proceeding against
this defendant.
In practice, the
City’s adoption of a blended approach on costs has meant that parties are not
seeking “public interest litigant” status in proceedings, such as would allow the
court to reach a proper legal conclusion on the issue. Rather, parties are
asserting the status of “public interest litigant” at the commencement of the
proceeding. Furthermore, as exemplified
by the Friends of Lansdowne Inc, some parties have now gone so far as to seek a
commitment from the City that it will not ask for its, costs even if successful,
outside of any consideration of the merits of the party’s position. In the
Friends of Lansdowne Inc. case, the application of the City’s Costs Policy became the focus of a
separate court motion early on and served to prolong the proceeding and
actually increase the legal costs.
The City’s abandonment
of the distinction between civil and administrative litigation was intended to
ensure that all persons or organizations seeking to challenge Council decisions
would be on a “level playing field”.
However, the extension of the more restrictive OMB cost principles to
civil litigation may have had unintended consequences, potentially fostering
litigation against the City and exposing taxpayers to considerable legal
expenses.
It has also clearly
set the City of Ottawa apart from any other large municipality in Canada, as
well as the Provincial and Federal Governments, with regard to the conduct of
civil litigation. While a full listing of municipalities consulted is contained
at Document 3, only the City of Toronto appears to have even considered the
issue. It did so at its meeting of August 5th -6th ,
2009, at which point Toronto City Council adopted the following, status quo resolution: “City Legal Staff
continue to have the authority to exercise their discretion in determining
whether to make a request for litigation costs against community and resident
public interest groups at public tribunals.”
While the goal of restricting costs as a means of not discouraging challenges to City Council decisions is understandable, account must be had both to the context in which such challenges may be brought, as well as the apparent implications of the City’s Costs Policy. During their discussion of this item, the Rural Issues Advisory Committee expressed the view that civic participation in the democratic process could be deterred by a practice of seeking costs before the courts or administrative tribunals. Interestingly, the courts appear to have adopted an opposing view, as most recently articulated by the Ontario Superior Court of Justice in the Friends of Lansdowne Inc. case, described in more detail below. In this regard, the civil courts have increasingly taken account of the context in which municipal decision-making takes place and shown deference to councils in that process.
In carrying out its role as elected representative of the residents of the City of Ottawa, Council collectively makes a wide variety of decisions affecting people and businesses. It does so pursuant to the democratic mandate given by the electorate. Therefore, Council’s decisions embody and reflect the general public interest of the City, as a whole. These decisions are reached through open, public debate. Interested groups or residents may seek to influence Council’s decisions through the democratic process and are encouraged to do so either through written submissions or delegations before Committees.
It was in consideration of this democratic context that Mr. Justice C. Hackland recently noted in the Friends of Lansdowne Inc. case that, “The case law recognizes that Municipal councils are elected representatives of their communities and, as such, are accountable to their constituents.” Justice Hackland quoted approvingly a comment made by Supreme Court Justice Beverly McLachlin, in a 1994 case involving the City of Vancouver, in which she said:
Recent commentary suggests an emerging consensus that courts must respect the responsibility of elected municipal bodies to serve the people who elected them and exercise caution to avoid substituting their views of what is best for the citizens of those municipal councils. Barring clear demonstration that a municipal decision was beyond its powers, courts should not so hold.
Justice Hackland went on to note the extensive consultation, studies, and analysis that preceded City Council’s decision in the redevelopment of Lansdowne Park:
After a lengthy process involving numerous studies, public consultations, experts’ reports including legal opinions, presentations and debates at City Council, and a review of the LPP by the City’s Auditor General, assisted by his own consultants, City Council voted to approve the initial stages of this public private partnership. Inherent in this process and in the approval of the by-law (by-law 2010-255) were a number of policy decisions....This court has no jurisdiction to pass on the wisdom or the reasonableness of these policy decisions and to the limited extent that the court may legitimately intervene, a generous deferential standard is required [emphasis added].
In his decision, Justice Hackland reinforced the prevailing view, as also articulated by both the Ontario Court of Appeal and the Supreme Court of Canada, that the courts have no place in the chambers of the nation’s municipal councils. Therefore, a policy that serves to encourage recourse to the courts would appear contrary to the view articulated by Canadian courts, particularly in view of their clear unwillingness to engage in debates on the merits of municipal council decisions.
As was noted in the
original 2009 Report, the awarding of costs to a successful party is a standard
feature of hearings in the civil courts. The potential for cost consequences
can operate both as a disincentive to launch a lawsuit for tactical reasons and
also as an incentive for the early negotiation of settlements. The earlier
report also noted that, from 2004 until 2008, the City had been successful in
seeking costs with respect to challenges to its No Smoking By-law in 2002 [$17,797.32 from the Pub and Bar
Coalition of Ontario] and its Adult
Entertainment Parlour By-law in 2006 [$121,543.00 from the Adult
Entertainment Association of Canada].
By way of further background,
on October 3rd, 2006, the Ontario Superior Court of Justice dismissed an
application by Canadians for Language Fairness ("CLF") brought
against the City of Ottawa to have the City's Bilingualism Policy and By-law declared to be of no force and
effect.
On February 9th,
2007, Madam Justice M. Métivier ordered the CLF to contribute to the costs of
the City of Ottawa, in the amount of $50,000.00. In doing so, Madam Justice Métivier's
comments, set out below, identified the following key points concerning the
costs of litigating against municipalities:
The real question becomes should all of the citizens of the City of
Ottawa pay for the litigation of concerns raised by a small group of citizens. The
interests involved were those of the public impact of the City’s Bilingualism Policy. However, there had been no complaints of any
kind by any of the employees targeted by the By-Law. The judgment in this matter found that most
of the points raised by the Applicants [CLF] were without merit or substance
and were totally unsupported by evidence, other than some statistical data.
Having considered all of the circumstances herein including the
interests being attacked and protected, I find it would be unjust to have
the taxpayers of Ottawa absorb the entire cost of this litigation. Bringing a court action always involves a
risk. Litigants must remain aware of
that and proceed prudently and on meritorious grounds [emphasis added].
These judicial
comments serve to reinforce the general view of the courts that the decisions
of democratically-elected municipal councils should be respected. As interested
parties have an opportunity to influence government decision-making through the
democratic process, the general public and taxpayers should not be required to
fully fund a subsequent legal challenge.
Conversely, the unsuccessful party should bear some responsibility for
the legal costs incurred by the municipality.
Looking at the
notable court challenges that have been brought against the City since February
2009 and outlined in Document 4, City of Ottawa taxpayers have had to absorb legal
costs of approximately $1.7 million without the possibility of even seeking to recover
any portion of these, as might otherwise be available in the ordinary course of
civil litigation.
It is not only the interests of parties to litigation that are served by the rules surrounding awards of legal costs; these rules have also been developed with a view to encouraging the proper use of the courts. The possibility of having to pay one’s own costs as well as those of the opposing party helps to ensure that a prospective plaintiff has fully considered the merits of the case before drawing on the limited resources of the court system. The recent decision by the Ontario Court of Appeal in the South March Highlands’ application for leave to appeal the Divisional Court’s decision, described in Document 4, lends support to this view.
In that case, the Court of Appeal dismissed the leave application by the South March Highlands and expressly awarded $1,500 in costs to the City, despite the City’s clear statement that it was not seeking costs in accordance with its Costs Policy. The Court of Appeal’s insistence on awarding costs suggests that the decision was prompted by consideration of factors beyond compensating the City. Rather, the cost award may represent an implicit statement from the Court that a party contemplating the commencement or continuation of a proceeding must be prepared to face a cost award for invoking the court process, irrespective of the wishes of the opposing party.
ANALYSIS AND
OPTIONS
The City’s Policy on Seeking Legal Costs may have
caused the City to become embroiled in more costly litigation with parties who
are no longer subject to the traditional risk analysis associated with such
court actions. For example, from 2001 until 2008, the City successfully
defended legal challenges to its Bilingualism
Policy, the No Smoking By-law and
the Adult Entertainment Parlour By-law
and received some of its costs in each instance. However, since the Costs Policy was introduced in February 2009, the City has
successfully defended four significant Council or staff decisions but was
unable to ask for any of its costs of doing so.
Therefore, in response
to the Council direction of April 13th, 2011, set out below are a
number of options for consideration with respect to the City’s Policy on Seeking Legal Costs.
1. Repeal
the Policy
Under this option, cost awards would be determined in accordance with
the existing rules applicable to litigation, as outlined in the original 2009 Report. This reversion to the well-known rules would
provide a measure of consistency and ensure that all who seek to bring legal
actions against the City would be subject to the same standard. As such, community groups and individuals
seeking to challenge a Council decision would likely undertake the same risk
and cost analysis that all other litigants should consider prior to initiating
a legal action. Since Council enacted
its policy in February 2009, no major municipalities across Canada have opted
to follow Ottawa’s lead in this area. A
complete list of these comparator municipalities can be found at Document 3 of
this report.
In addition, the repeal of the Costs
Policy may serve to limit the number or scope of legal proceedings which
Legal Services is called on to defend, and also provide an opportunity to
reduce the cost of doing so. Looking solely at the four cases outlined in
Document 4, the legal expenses associated with the City’s successful defences
of those challenges have exceeded $1.5M. Reverting to the ordinary rules
governing civil litigation would provide the City with an opportunity to help
defray those costs.
It should be noted, however, that even if Council decides to repeal the
existing Policy, cost awards in OMB
matters will continue to be governed by the Board’s Rules, which effectively
serve as a bar against the City’s recovery of costs in such matters.
2. Revise
the Policy so that it applies only at first instance (e.g. trial or application
hearing stage) but does not apply to any appeals, reviews, reconsiderations,
etc.
Such an amendment would not only largely preserve the existing Costs Policy but also recognize the additional
time and expense to the City associated with conducting an appeal after
successfully defending itself in the first instance.
However, this approach would not prevent further challenges to Council
decisions brought by different parties or in different venues. By way of
example, the Lansdowne Park Conservancy recently initiated a second legal
challenge with regard to the redevelopment of Lansdowne Park. This new application seeks a court order
cancelling the negotiations with the Ottawa Sports and Entertainment Group and
compelling the City to hold an RFP for the redevelopment and management of
Lansdowne Park. It should be noted that,
between 2009 and 2010, the City spent $22,700 in defending an injunction
application that Mr. John E. Martin, the sole proprietor of the Lansdowne Park
Conservancy, had brought against this same municipal project.
3. Leave
the Policy “as is”
The main advantage of this option is that it preserves City Council’s
original Policy on Seeking Legal Costs
and continues to provide assurances to a party contemplating litigation against
the City that costs will not be sought “from community and resident groups or
an individual who is a public interest litigant... unless the case advanced [by
them] can reasonably be considered either frivolous or vexatious, in bad faith
or an abuse of process under all of the circumstances.” The key disadvantages, as described above,
are that the City may continue to be exposed to litigation unnecessarily without
the possibility of seeking costs if successful.
Furthermore, the Costs Policy itself may become the focus of
legal proceedings, as it was in a motion in the Friends of Lansdowne Inc. case.
In view of the considerations associated with either leaving the
current Costs Policy in place, or revising it to apply only to cases of first
instance, Legal Services is recommending that City Council revert to the
ordinary rules and common law surrounding the determination of costs in
litigation before the courts and administrative tribunals. This approach would preserve
the protection from cost awards given by the courts to true public interest
litigants, based on the courts’ generally-accepted approach. However, requiring
plaintiffs to meet the legal test in the courts may help to ensure that the Costs Policy itself does not become the
focus of litigation and that taxpayers not be required to unnecessarily fund
litigation against the municipality. In
addition, repealing the Costs Policy
would still retain the existing rules in OMB matters which dictate that costs
will be awarded only in “the clearest of cases, where the conduct complained of
is unreasonable and improper.”
CONSULTATION
As this report is in
response to a Council direction, no consultation was undertaken.
RISK MANAGEMENT
IMPLICATIONS:
There are no risk management concerns arising from this report.
LEGAL IMPLICATIONS
There are no
significant legal implications associated with the approval of the
recommendation contained in this report, except as outlined above.
FINANCIAL IMPLICATIONS
The Finance
Department supports the initiative to repeal the City’s Policy on Seeking Legal Costs as it will provide additional
opportunity for the City of Ottawa to seek to recover costs in litigation
matters.
DOCUMENTS
Document 1: A
Complete Copy of Motion No. 48/46
Document 2: Report ACS2009-CMR-CSE-0001, “Motion –
Policy on Seeking Cost Awards” and related minutes
Document 3: List of Comparator Municipalities
Document 4: Recent Cases of Note
DISPOSITION
City Clerk and
Solicitor will undertake to implement any changes to the City’s Policy on Seeking Legal Costs as approved by City Council.
DOCUMENT 1
Moved by Councillor R. Chiarelli
Seconded by Councillor A. Cullen
WHEREAS community groups and resident
organizations contribute significantly to public policy development at the City
by offering advice and by putting aspects of Council decisions to the test;
AND WHEREAS community and resident public interest organizations
contribute to the community agenda in a range of subject areas from the
environment to accessibility to business issues to health protection to
development issues;
AND WHEREAS this contribution is valuable to the community irrespective
of whether the opinion advocated is ultimately shared by the majority of
Council;
AND WHEREAS Council wishes to encourage participation in and by such
community and resident public interest organizations and, in fact, gives out
awards every year to members of the community for their participation in such
activities;
AND WHEREAS occasionally, disputes and disagreements over matters of
principle sometimes require decisions by third party tribunals, some of which
are established specifically to deal with disagreements between public
interest;
AND WHEREAS many such tribunals and boards exist to invite participation
by individuals, residents and community public interest organizations;
AND WHEREAS it is important to guard City tax dollars against claims and
legal proceedings that are frivolous, vexatious or of oblique motive;
AND WHEREAS in instances where the City's position is upheld in hearings,
legal and/or other proceedings in front of tribunals, the City operates under a
set of practices with respect to whether the City will apply to tribunals to
have cost awards charged against the community and resident public interest
groups to be paid over to the City;
AND WHEREAS a practice of seeking cost awards could serve as a deterrent
to residents considering participating in such organizations or as individuals
in the same democratic processes;
AND WHEREAS the
City’s Public Consultation policy includes the following provision for
periodically refreshing that policy:
§ Facilitating & Building Capacity for a Collaborative Community – Strengthening links between the City and the
community on public participation initiatives and building capacity in the
community for citizen engagement on issues that affect them through a corporate
Public Participation Community of Practice.
BE IT RESOLVED THAT Council clarify its policy on seeking cost awards
after successfully defending its positions against community and resident
public interest groups;
AND THAT the clarification be structured such that, in such disputes in
front of tribunals, the City will not seek cost awards from community or
resident public interest groups unless the presiding judge or tribunal or Chair
of proceedings indicates that the case advanced by the community or resident
public interest group is either frivolous, vexatious or of oblique motive.
DOCUMENT 2
Report to / Rapport
au:
Corporate Services
and Economic Development Committee
Comité des services
organisationnels et du développement économique
and Council / et au
Conseil
Submitted by / Soumis
par: City Council / Conseil municipal
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City Wide / À
l'échelle de la Ville |
Ref N°:
ACS2009-CMR-CSE-0001 |
SUBJECT: MOTION
– POLICY ON SEEKING COST AWARDS
OBJET: MOTION - politique sur l’attribution de dépens
That the Corporate Services and Economic Development Committee consider
the following motion and forward its recommendation(s) to Council:
That Council clarify its
policy on seeking cost awards after successfully defending its positions
against community and resident public interest groups and that the
clarification be structured such that, in such disputes in front of tribunals,
the City will not seek cost awards from community or resident public interest
groups unless the presiding judge or tribunal or Chair of proceedings indicates
that the case advanced by the community or resident public interest group is
either frivolous, vexatious or of oblique motive.
Que le Comité des services organisationnels et du
développement économique examine la motion suivante et qu’il transmette ses
recommandations au Conseil :
Que le Conseil
clarifie sa politique sur l’attribution de dépens après avoir défendu avec
succès ses positions contre les groupes d’intérêt communautaires et de
résidents, et que la clarification soit structurée de façon que lors de tels
litiges devant les tribunaux, la Ville ne cherche pas à obtenir l’attribution
de dépens à l’encontre de groupes d’intérêt communautaires et de résidents à
moins que le juge président, le tribunal ou la personne qui préside la
procédure n’indique que la cause défendue par le groupe d’intérêt communautaire
ou de résidents est frivole ou vexatoire ou qu’elle répond à des motifs
détournés.
WHEREAS community groups and resident
organizations contribute significantly to public policy development at the City
by offering advice and by putting aspects of Council decisions to the test;
AND WHEREAS community and resident public
interest organizations contribute to the community agenda in a range of subject
areas from the environment to accessibility to business issues to health
protection to development issues;
AND WHEREAS this contribution is valuable to
the community irrespective of whether the opinion advocated is ultimately
shared by the majority of Council;
AND WHEREAS Council wishes to encourage
participation in and by such community and resident public interest
organizations and, in fact, gives out awards every year to members of the
community for their participation in such activities;
AND WHEREAS occasionally, disputes and
disagreements over matters of principle sometimes require decisions by third
party tribunals, some of which are established specifically to deal with
disagreements between public interest;
AND WHEREAS many such tribunals and boards
exist to invite participation by individuals, residents and community public
interest organizations;
AND WHEREAS it is important to guard City tax
dollars against claims and legal proceedings that are frivolous, vexatious or
of oblique motive;
AND WHEREAS in instances where the City's
position is upheld in hearings, legal and/or other proceedings in front of
tribunals, the City operates under a set of practices with respect to whether
the City will apply to tribunals to have cost awards charged against the
community and resident public interest groups to be paid over to the City;
AND WHEREAS a practice of seeking cost awards
could serve as a deterrent to residents considering participating in such
organizations or as individuals in the same democratic processes;
AND
WHEREAS the City’s Public Consultation policy includes the following provision
for periodically refreshing that policy:
Facilitating
& Building Capacity for a Collaborative Community - Strengthening links
between the City and the community on public participation initiatives and
building capacity in the community for citizen engagement on issues that affect
them through a corporate Public Participation Community of Practice.
BE
IT RESOLVED THAT Council clarify its policy on seeking cost awards after
successfully defending its positions against community and resident public
interest groups;
AND THAT the clarification be structured such that, in such disputes in
front of tribunals, the City will not seek cost awards from community or
resident public interest groups unless the presiding judge or tribunal or Chair
of proceedings indicates that the case advanced by the community or resident
public interest group is either frivolous, vexatious or of oblique motive.
This motion was subsequently referred by Corporate Services
and Economic Development Committee at its meeting of 20 January 2009 back to
staff for a report.
Although the specific case that gave rise to this review of legal costs
originally arose at a hearing before the Ontario Municipal Board (“OMB”) and,
subsequently, the Divisional Court, the motion expressly refers to “tribunals”
in a more generic manner. Therefore, a
brief review of the statutory jurisdiction for costs at tribunals generally
will precede a more detailed examination of costs at the OMB and the courts.
(a)
Statutory
Powers Procedure Act
Subsection 17.1(1) of the Statutory Powers Procedure Act (the “Act”)
provides that a tribunal may, in the circumstances set out in its rules, “order
a party to pay all or part of another party’s costs in a proceeding.” The Act goes on to state that a
tribunal shall not make an order to pay costs under Section 17.1 unless the
conduct of a party has been “unreasonable, frivolous or vexatious or a party
has acted in bad faith.” Furthermore,
Subsection 17.1(4) provides that a tribunal may make rules with respect to the
“ordering of costs”, the “circumstances in which costs may be ordered” and the
amount. Finally, Section 23 of the Act
provides a tribunal with the statutory discretion to “make such orders or give
directions in proceedings before it as it considers proper to prevent abuse of
its processes.”
In summary, the Statutory Powers Procedure Act gives tribunals
in Ontario (such as the City’s License Committee) a general power to determine
their respective rules, including any with regard to cost awards. However, as will be seen below, both the
Ontario Municipal Board and the courts have their own enabling statutes which
specifically address rules of procedure and matters regarding costs.
(b)
OMB
Costs
On appeals before the OMB, one Member recently characterized an order
for costs as being “very rare”. In fact,
although the Board has the discretion under its enabling legislation to order
“by whom and to whom any costs are to be paid”, it has expressly limited that
authority in its Rules of Practice and Procedure. For example, in Section 103 of its Rules,
the Board, “may only order costs against a party if the conduct or course of
conduct of a party has been unreasonable, frivolous, vexatious
or if the party has acted in bad faith” [emphasis added]. The provision goes on to state that “clearly
unreasonable, frivolous, vexatious or bad faith conduct” may include the
following:
In a 2007 decision, Member M. G. Somers summarized the Board’s
tranditional consideration of costs based on the “reasonable person” standard:
In determining if an award for costs is
warranted, the Board must consider all of the circumstances of the case and the
conduct of the party. It is only where
the Board finds that a party wrongly brought the appeal or participated
unacceptably in preparation of hearing events, that an award of costs will be
made. The test for determining if a
party’s conduct is clearly unreasonable is where a reasonable person,
having looked at all of the circumstances of the case, such as the conduct or
course of conduct of a party at the hearing and the extent of his or her
familiarity with the Board’s procedure, exclaims that the action of the party
is not right [emphasis added].
On January 30th, 2009, the Ontario Municipal Board issued a
significant ruling on costs wherein it concluded:
The decision in this matter is intended to reinforce and reiterate the Board’s practice
that costs are not awarded lightly nor are they awarded routinely. Awards of
costs are rare, especially proportionate to the number of cases decided by the
Board.
In this recent case, Kimvar Enterprises Inc. (the “Developer”) brought
an application seeking costs of approximately $3.2 million after being
successful in a lengthy appeal. In
rejecting this application, the Board summarized its caselaw on costs in the
following fashion:
…unlike the courts, applications for costs
are not routine, and cost awards are rare.
In short, a successful party appearing before the Board should have no
expectation that it will recover its costs.
The Board “does not award costs lightly and it does not award costs
automatically. In decision after
decision, the Board has expressed a sensitivity to the right of appellants to
bring matters before this Board”… . Nevertheless, the Board has also concluded
that parties must be accountable for their conduct and if that conduct or
course of conduct has been unreasonable, frivolous or vexatious, or if the
party has acted in bad faith, then the Board may order costs.
Finally, the decision is also of importance for the fact that it
addressed whether or not the Developer’s application for costs had been brought
for “improper purposes”. In this regard,
the Board noted that, “the suggestion was made that the cost claim was brought
for the purpose of silencing public opposition and accordingly constitutes an
improper purpose.” Although the Board
rejected this suggestion, it went on to accept the submissions made by Clayton
Ruby, acting for the Environmental Defence Canada as an intervenor, that, “the
public-interest impact of a cost award is a relevant factor that the Board must
consider in order to properly exercise its discretion” in such instances.
In its final analysis, the Board reiterated its uniform stance on costs
in the following fashion:
The Board agrees with Mr. Ruby’s submission
that the Board takes a cautious approach to cost awards against citizens and
strives to accommodate public participation in land use planning
decisions. In fact, in the very limited
number of cases where awards of costs have been made against citizens, amounts
have always been nominal. This is
entirely consistent with how the Board has typically proceeded: costs cannot be used as a threat to deter
public participation; and costs will only be awarded (whether the parties are
commercial entities, ratepayers or citizens) where the conduct complained of is
so improper that it cannot be ignored.
*****
Nonetheless, there is no question that the
claim is unprecedented and the Board finds that an award of costs anywhere near
the amount requested would create a chilling effect. In this regard, the Board adopts Mr. Ruby’s
submission that the public interest impact of a cost award is a relevant factor
for the Board to consider in exercising its discretion. It is for this reason that the Board has
restricted awards of costs to the clearest of cases, where the conduct
complained of is unreasonable and improper.
(c)
Court
Costs
In contrast to cost awards before most tribunals, the general standard
for court costs is that “costs follow the event”. In other words, the successful party receives
some of the costs that have been incurred.
Not surprisingly, the expense of litigation can become a deterrent when
parties must consider the likelihood of paying the opposing party’s costs, as
well as their own. In this regard, the
most common costs award is that of “partial indemnity”. As its name suggests, a partial indemnity
award is intended to provide a partial reimbursement to a party for the costs
it incurred, generally in the range of 50% to 65% of its actual total costs
paid. This is generally subject to the
proviso that the costs be proportional to the complexity and length of the
court hearing. On the other hand, costs awarded on a “substantial indemnity” basis
are intended to almost fully reimburse a party its actual costs incurred,
usually 80%. Once again, this is subject
to the same caveat concerning proportionality of cost to complexity and length
of hearing.
In accordance with Subsection 131(1) of the Courts of Justice Act,
“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 costs shall be paid.” More
specifically, Rule 57 of the Rules of Civil Procedure sets out a number of
factors (in addition to the result in the proceeding and any offer to settle)
that a court may consider when considering the allocation of costs, including:
As noted above, there are many factors that are to be considered in
whether or not a court will award partial indemnity or substantial indemnity in
a costs determination. However, one of
the more common criteria applied is whether or not an offer to settle was made
and the party making the offer was as successful as outlined in the offer. In this respect, parties are encouraged to make
an offer to settle under the Rules of Civil Procedure as the cost
consequences may be an incentive to compromise.
For example, where a plaintiff rejects a defendant’s offer to settle and
is awarded more at trial, the plaintiff will generally be granted partial
indemnity costs up to the time of the offer and substantial indemnity costs
thereafter. Alternatively, where a
plaintiff is awarded an amount equal to or less than the defendant’s offer to
settle, the plaintiff would receive partial indemnity costs up to the time of
the offer, and then the defendant would be awarded partial indemnity costs for
the remainder of the trial.
Having reviewed the general rules relating to awards of costs in civil
litigation matters, as well as tribunals, generally, it may be helpful to see
the application of these rules in the context of actual City cases.
GREENSPACE ALLIANCE v. OTTAWA ET AL.
On December 10, 2008, the City of Ottawa received the decision of the
Ontario Divisional Court with respect to costs in the matter of The
Greenspace Alliance of Canada’s Capital [the “Alliance”] v. City of
Ottawa, 1374537 Ontario Ltd. and Findlay Creek Properties Limited
[“Tartan”]. Briefly, costs were awarded
to Tartan in the amount of $25,000 and to the City in the amount of $4,876.30
plus G.S.T. Set out below is a summary
of the relevant facts that led to this judicial award of costs.
The Alliance had appealed to the Ontario Municipal Board two zoning
by-laws which rezoned lands within Leitrim.
The appeals were largely on the basis that the by-laws would permit
development on what the Alliance alleged to be significant wetlands. Tartan brought a motion to the OMB in May
2007 to dismiss the appeals on the basis that the lands in question had been
determined by Ministry of Natural Resources mapping not to be significant
wetland. The City supported Tartan’s
motion to dismiss. The motion was
successful and the appeals were dismissed by the Board on June 18, 2007.
The Alliance then sought a rehearing of the motion pursuant to Section
43 of the Ontario Municipal Board Act.
On September 12, 2007, this request was denied by the Board Chair, Marie
Hubbard. In October 2007, the Alliance
commenced an application in Divisional Court for a judicial review of the
Board’s decision to dismiss the appeals.
On June 25, 2008 the City enacted a new Comprehensive Zoning
By-law. The appeal period for this
by-law ended on July 17, 2008. The
Alliance did not appeal the subject lands in the new by-law. As such, Legal Services wrote to the
solicitor for the Alliance stating that their appeal was rendered moot by
virtue of the fact that the zoning for the lands was now governed by the new
Comprehensive Zoning By-law and inviting the Alliance to discontinue the
application for judicial review. Shortly
thereafter, the City and Tartan jointly made an offer to settle the application
on a “no cost” basis if it were discontinued.
When the Alliance rejected this offer, the City brought a motion to have
the judicial review application discontinued on the basis that it was
moot. This motion was heard on October
2, 2008 and was unanimously approved by the Divisional Court.
In its decision, the Court invited the Parties to provide written
submissions as to costs. The City sought
its costs of $4,876.30 (actual costs incurred in the preparation and argument
of the motion with respect to mootness), while Tartan (which had expended some
$120,000 on all aspects of the judicial review) sought costs in the amount of
$67,217.11
As stated above, the City was awarded $4,876.30, while Tartan was
awarded $25,000. In its ruling on costs,
the Divisional Court observed that, “Without tracing the history of this
litigation, it had to be apparent to the applicant [Alliance] that it had
little chance of success”. The Court
went on to state that, “Every opportunity was given to the applicant to
withdraw its application, including a joint offer to settle from the
respondents whereby the applicant could have withdrawn without costs”.
In its submission on costs, the Alliance’s primary argument was that it
was a “public interest litigant” and, as such, should not have costs awarded
against it. A leading case with respect
to costs and public interest litigation (Incredible Electronics Inc.
v. Canada (Attorney General)) has held as follows:
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 the present case, the Divisional Court did not accept the Alliance’s
submissions that they were a public interest litigant. While there is no consensus on how best to
define “public interest litigation”, it is generally viewed as using the legal
system to instigate changes that affect the public. In contrast to the more common private
interest litigation, a case found to be “public interest litigation” will
usually have wider implications beyond the immediate case and will affect a
greater section of the general public than just the named litigant. In this instance, the Divisional Court found
that there was no overriding public interest at issue in the litigation and
therefore the Alliance could not be a public interest litigant.
On December 19, 2008, legal counsel for the Alliance gave notice of
their intent to appeal the Divisional Court’s ruling on costs to the Ontario
Court of Appeal.
CANADIANS FOR LANGUAGE FAIRNESS v. OTTAWA
The above approach to costs is consistent with the Court ruling in Canadians
For Language Fairness v. City of Ottawa. Briefly, this case constituted a challenge to
the City’s Bilingualism Policy. The City
expended approximately $243,230 in the defence of the Policy and sought to
recover $149,349.46 in costs on a partial indemnity basis. In response, the Applicants argued that they
were public interest litigants and that “the ordering of costs would have the
chilling effect of discouraging citizens from bringing important public issues
into a forum for proper determination.”
The Court identified that the key issue in this matter was as follows:
The real question becomes should all of the citizens of the
City of Ottawa pay for the litigation of concerns raised by a small group of
citizens.
In rejecting the Applicants’ argument, the Court awarded the City
$50,000 in costs based on the following rationale:
Having considered all of the circumstances
herein including the interests being attacked and protected, I find it would be
unjust to have the taxpayers of Ottawa absorb the entire cost of this
litigation. Bringing a court action
always involves a risk. Litigants must
remain aware of that and proceed prudently and on meritorious grounds.
CONSULTATION
This item will be advertised in the local dailies as part of
the Public Meeting Advertisement on Friday preceding the Committee meeting.
On January 20, 2009, the Rural Issues Advisory Committee
considered this matter and moved the following motion:
Moved
by A. Warda
WHEREAS civic participation is essential for a democratic process. Residents and community groups
have been long recognized as an important component of policy development and
decision-making.
AND
WHEREAS a practice of seeking cost awards may significantly deter residents and
community groups from participation in the available process and appearing
before boards or courts.
BE
IT RESOLVED that the Rural Issues Advisory Committee support and endorse the
Chiarelli/Cullen motion and urge the City Council to clarify city’s policy on
seeking cost awards from residents, community groups and other community based
organizations unless the presiding judge or tribunal or Chair of the
proceedings indicates that the case advanced by the community or resident
public interest group is either frivolous, vexatious or of oblique motive.
CARRIED
LEGAL/RISK MANAGEMENT IMPLICATIONS
The decisions involved in the recommendation of this motion to Council
do not have any significant Legal/Risk Management concerns.
FINANCIAL IMPLICATIONS
It is not often in Ottawa that a
matter heard by the Ontario Municipal Board is subsequently brought before
Divisional Court either by a motion for leave to
appeal or a judicial review application.
As a result, it is not anticipated that the costs involved for such
policy matters will be significant.
Further, as validation of the Board’s position on costs in general,
costs have not been sought by the City in any planning matter before the Board
over the last five years. In fact, prior
to the Alliance case, the City had only been before the Divisional Court once
on a planning matter in the past five years.
In that case, the City was awarded $7,500.00 in costs when the
Divisional Court dismissed an application by 156621 Canada Inc. for judicial review
of an Ontario Municipal Board decision.
However, as noted above, cost awards
before the courts are a routine part of the legal process, as well as a tool to
encourage parties to settle disputes. In
the case involving the City’s Bilingualism Policy, $243,230 was expended by the City in its defence. Thus, where policy decisions of Council are
brought before the Courts by a person or group claiming to represent a larger
or public interest, the expenditure of significant sums can be required to
defend Council’s decisions.
In summary, the following three court
awards of costs have been made to the City from various groups in non-planning
matters over the past five years:
·
Pub and Bar Coalition of Ontario -
$17,797.32 (2002)
·
Canadians for Language Fairness -
$50,000.00 (2006)
·
Adult Entertainment Assoc. of Canada
- $121,543.00 (2007)
In the present instance, the Alliance had two opportunities to make its
case before the Ontario Municipal Board (the motion to dismiss and the request
for a rehearing) without the risk of incurring any costs. It is staff’s view that, when the Alliance
made the third attempt by means of an application for judicial review and then
refused to accept the offer to withdraw the application on a without costs basis,
it was appropriate that the City seek its costs as they related to the court
action only.
Finally, as discussed above, the general principles applied by Legal
Services with respect to the question of seeking costs from community groups
are set out below.
(a)
Ontario
Municipal Board
The OMB “rarely” awards costs and only where the actions of a party are
clearly unreasonable, frivolous and vexatious or done in bad faith. Even so, the Board’s awarding of costs
against citizens has generally been for nominal amounts. As such, the City rarely seeks cost before
the OMB from any party and would do so only where this test is met. In addition, this would include consideration
of the Board’s most recent pronouncement that “the public interest impact of a
costs award is a relevant factor that the Board must consider in order to
properly exercise its discretion.”
(b)
Courts
The Courts will award costs more regularly than the Ontario Municipal
Board or various other administrative tribunals. However, the Courts have developed caselaw
which allows a community group to put forward the argument that they are a
“public interest litigant” and should not have costs awarded against them if
they are unsuccessful. In considering
whether to seek costs, staff would review the particular circumstances of each
case to come to determine whether the community group fell within the
classification of a “public interest litigant” and, thus, whether it would be
appropriate to seek costs against it.
Ultimately, of course, even if the City sought costs, it would be for
the Court to determine if the community group met the definition of a public
interest litigant.
SUPPORTING DOCUMENTATION
Document 1 – Memo from the Rural
Issues Advisory Committee dated 30 January 2009
Legal Services to implement Council’s
decision.
M E M O
/ N O T E D E
S E R V I C E
|
|
|
To / Destinataire |
Chair and Members of the Corporate Services and Economic Development Committee |
File/N° de
fichier: G06-03
09 01 |
|
From / Expéditeur |
Carole Langford, Coordinator, Rural
Issues Advisory Committee
|
|
|
Subject / Objet |
Policy on Seeking Cost Awards
|
Date: 30 January
2009 |
At its 20
January 2009 meeting, the Rural Issues Advisory Committee discussed the
proposed Chiarelli/Cullen motion regarding policy on seeking cost awards. After discussion, the Committee approved the
following motion:
WHEREAS civic participation is essential for a
democratic process. Residents and community groups have been long
recognized as an important component of policy development and decision-making.
AND WHEREAS a practice of seeking cost awards may significantly deter
residents and community groups from participation in the available process and
appearing before boards or courts.
BE IT RESOLVED that the Rural Issues Advisory Committee support and
endorse the Chiarelli/Cullen motion and urge City Council to clarify city’s
policy on seeking cost awards from residents, community groups and other
community based organizations unless the presiding judge or tribunal or Chair
of the proceedings indicates that the case advanced by the community or
resident public interest group is either frivolous, vexatious or of oblique
motive.
An extract of the draft minutes from the 20 January 2009 RIAC meeting is attached for your information.
Carole Langford
Attach. 1
cc: Members of Council
Derrick Moodie, Rural Affairs Officer
|
rural issues Advisory Committee Extract of DRAFT Minutes 20 JANUARY 2009 |
|
Comité consultatif sur les questions rurales Extrait dE L’ÉBAUCHE Du ProcÈs-verbal le 20 JANVIER 2009 |
|
|
|
||
2. MOTION – POLICY ON SEEKING COST AWARDS
MOTION - MOTION - POLITIQUE SUR
L’ATTRIBUTION DE DÉPENSE
A copy of letters and statements of support for the above-noted motion
were received by the following groups:
-
- Environmental and Forests and Greenspace
Advisory Committees
-
- Canadian Parks and Wilderness Society – Ottawa
Vanier Chapter
- - Conseil régional de l’environnement et du développement durable de l’Outaouais
-
- Ecology Ottawa
-
- Federation of Citizens’ Associations of
Ottawa-Carleton
-
- Ottawa-Carleton Wildlife Centre
-
- Ottawa Field-Naturalists’ Club
-
- Sierra Club
Held on
file with the City Clerk's office pursuant to the City of Ottawa Records
Retention and Disposition By-law.
Councillor Cullen informed the Committee that the above-noted item was
considered at the Corporate Services and Economic Development Committee (CSEDC)
early that morning. The item was
referred to staff and will be considered at the 3 February 2009 CSEDC
meeting. He read the motion and
explained the recent case pertaining to the Greenspace Alliance of Canada’s
Capital and Leitrim Wetlands.
In response to a question from Member Webster, Councillor Cullen advised
that it depended on the case whether the City requested for awarded costs in
past cases. He added that community
groups could certainly request for it.
With respect to community groups, Councillor Cullen advised that the
City has a definition to clarify who falls into that category.
Derrick Moodie, Rural Affairs Officer, highlighted that there is a
private members Bill 138 coming forward that is designed to help prevent
slap-action lawsuits.
Moved by A. Warda,
WHEREAS civic participation is essential for a
democratic process. Residents and community groups
have been long recognized as an important component of policy development and
decision-making.
AND WHEREAS a practice of seeking cost awards may significantly deter
residents and community groups from participation in the available process and
appearing before boards or courts.
BE IT RESOLVED that the Rural Issues Advisory Committee support and
endorse the Chiarelli/Cullen motion and urge City Council to clarify city’s
policy on seeking cost awards from residents, community groups and other
community based organizations unless the presiding judge or tribunal or Chair
of the proceedings indicates that the case advanced by the community or
resident public interest group is either frivolous, vexatious or of oblique
motive.
CARRIED
Action: Member Warda will present the motion to the Corporate Services and Economic Development Committee meeting on 3 February 2009.
DOCUMENT 3
LIST OF COMPARATOR
MUNICIPALITIES
|
Municipality |
Response |
|
Aurora |
No policy |
|
Barrie |
No policy |
|
Brampton |
No policy |
|
Brantford |
No policy |
|
Burlington |
No policy |
|
Calgary |
No policy |
|
Cambridge |
No policy |
|
Charlottetown |
No policy |
|
Clarington |
No policy |
|
Durham |
No policy |
|
East Gwillimbury |
No policy |
|
Edmonton |
No policy |
|
Fort Erie |
No policy |
|
Guelph |
No policy |
|
Halifax |
No policy |
|
Halton |
No policy |
|
Hamilton |
No policy |
|
Innisfil |
No policy |
|
Kingston |
No policy |
|
Kitchener |
No policy |
|
Lambton |
No policy |
|
Leamington |
No policy |
|
London |
No policy |
|
Markham |
No policy |
|
Mississauga |
No policy |
|
Muskoka |
No policy |
|
New Tecumseth |
No policy |
|
Newmarket |
No policy |
|
Niagara Falls |
No policy |
|
Niagara Region |
No policy |
|
North Bay |
No policy |
|
Oakville |
No policy |
|
Oshawa |
No policy |
|
Peel |
No policy |
|
Peterborough |
No policy |
|
Richmond Hill |
No policy |
|
Sarnia |
No policy |
|
Saskatoon |
No policy |
|
St. Catharines |
No policy |
|
St. John’s |
No policy |
|
Sudbury |
No policy |
|
Thunder Bay |
No policy |
|
Toronto |
No policy |
|
Vancouver |
No policy |
|
Vaughan |
No policy |
|
Victoria |
No policy |
|
Waterloo |
No policy |
|
Whitby |
No policy |
|
Windsor |
No policy |
|
Winnipeg |
No policy |
|
York |
No policy |
DOCUMENT 4
Recent Cases of Note:
The factual origins
surrounding the passage of the City’s Policy
on Seeking Legal Costs in 2009 stemmed from an outstanding court order of
costs owed to the City of Ottawa in the amount of almost $5K against the
Greenspace Alliance of Canada’s Capital (“Alliance”). In hindsight, the practical and unintentional
effect of this Costs Policy may have
been to expose the City to more civil litigation and increased legal costs over
the last two years. In summary, the following four cases would seem to fit the
profile to be subject to the City’s Policy
on Seeking Legal Costs, including the judicial review launched by the
Alliance, which was the triggering event for the City’s current policy.
In reviewing the
City’s Costs Policy and the cases
described below, it is important to appreciate two fundamental influences
concerning court awarded costs. Firstly, Section 57.01 of the Rules of Civil Procedure, being Ontario
Regulation 194, sets out the following factors that a court must examine in
exercising its discretion to award costs:
57.01 (1) In
exercising its discretion under section 131 of the Courts of Justice Act to
award costs, the court may consider, in addition to the result in the
proceeding and any offer to settle or to contribute made in writing,
(0.a) the
principle of indemnity, including, where applicable, the experience of the
lawyer for the party entitled to the costs as well as the rates charged and the
hours spent by that lawyer;
(0.b) the
amount of costs that an unsuccessful party could reasonably expect to pay in
relation to the step in proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the
proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to
lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through
negligence, mistake or excessive caution;
(g) a party’s denial of refusal to admit anything that should
have been admitted;
(h) whether it is appropriate to award any costs or more than
one set of costs where a party,
(i) commenced
separate proceedings for claims that should have been made in one or more
proceeding, or
(ii) in defending a
proceeding separated unnecessarily from another party in the same interest or
defended by a difference lawyer; and
(i)
any other matter
relevant to the question of costs.
Secondly, in the
2009 case entitled, Davies v. Clarington
(Municipality), the Ontario Court of Appeal noted that the overriding
principles in fixing and assessing costs are fairness and reasonableness,
including the reasonable expectation of the party having to pay.
(a)
Greenspace Alliance of Canada’s Capital
The Alliance
submitted an appeal to the Ontario Municipal Board (“OMB”) of two zoning
by-laws which rezoned lands within the Leitrim area. The appeals were based largely on the premise
that the by-laws would permit development on what the Alliance alleged to be
significant wetlands. The property owner,
Tartan Developments, subsequently brought a motion before the OMB to dismiss
the appeals on the basis that Ministry of Natural Resources mapping had
determined the lands in question were not significant wetlands. The City supported Tartan’s motion to
dismiss, as did the OMB, which dismissed both of the appeals on June 18th, 2007.
The Alliance then
sought a rehearing of the motion pursuant to Section 43 of the Ontario
Municipal Board Act. On September
12th, 2007, this request was denied by the Board Chair, Marie Hubbard. Following that decision, the Alliance
commenced an application in Divisional Court for a judicial review of the
Board’s decision to dismiss the two appeals.
Of significance was
the fact that, on June 25, 2008, the City enacted a new Comprehensive Zoning By-law.
The appeal period for this by-law ended on July 17th, 2008. However, the Alliance did not appeal the
subject lands in the new by-law. As
such, Legal Services wrote to the solicitor for the Alliance stating that their
judicial review was rendered moot by virtue of the fact that the zoning for the
lands was now governed by the new Comprehensive
Zoning By-law and invited the Alliance to discontinue the application in
Divisional Court. Shortly thereafter,
the City and Tartan jointly made an offer to settle the court application on a
“no cost” basis if the judicial review was discontinued. When the Alliance rejected this offer, the
City brought a motion to have the court application discontinued on the basis
that it was moot. This motion was heard
on October 2nd, 2008, and was unanimously approved by the Divisional Court.
In its decision, the
Court invited the Parties to provide written submissions as to costs. The City sought its costs of $4,876.30
(actual costs incurred in the preparation and argument of the motion with
respect to mootness), while Tartan (which had expended some $120,000 on all
aspects of the judicial review) sought costs in the amount of $67,217.11.
Following receipt of
arguments from the Parties, the City was awarded costs in the amount of
$4,876.30, while Tartan was awarded $25,000 in costs. In its ruling, the Divisional Court observed
that, “Without tracing the history of
this litigation, it had to be apparent to the applicant [Alliance] that it had
little chance of success”. The Court
went on to state that, “Every opportunity
was given to the applicant to withdraw its application, including a joint offer
to settle from the respondents whereby the applicant could have withdrawn
without costs”.
In its submission on
costs, the Alliance’s primary argument was that it was a “public interest
litigant” and, as such, should not have costs awarded against it. The Divisional Court did not agree and found
that there was no overriding public interest at issue in the litigation and
therefore that the Alliance could not be a public interest litigant.
On December 19th,
2008, legal counsel for the Alliance gave notice of their intent to appeal the
Divisional Court’s ruling on costs to the Ontario Court of Appeal. This request for leave to appeal was
dismissed by the Ontario Court of Appeal on March 17th, 2009. However, by that time, the City’s Policy on Seeking Legal Costs had
overtaken this case and the costs previously ordered by the Divisional Court
were never recovered from the Alliance.
(b)
South
March Highlands – Carp River Conservation Inc.
In this case, the
South March Highlands-Carp River Conservation Inc. (“South March Highlands”)
filed an application for judicial review of Council’s decision to proceed with
construction of a portion of the Terry Fox Drive extension. The application was initiated with the likely
result that the City would not have been able to benefit from the Federal and
Provincial financing available as part of Infrastructure Stimulus Fund for this
capital project.
On December 14th,
2010, the Divisional Court dismissed the application by the South March
Highlands. In its decision, the Court
did not accept the group’s main argument that the City should have filed an
Addendum to the Terry Fox Drive project. Ultimately, the Divisional Court
agreed with the City’s determination that there was no need to file an Addendum
requiring further public review. In this regard, the Court noted the fact that
“the Ministry of the Environment
conducted a review of the City’s decision and was satisfied that the City had
complied with all provincial environmental assessment requirements” and
that other “Ministries and agencies got
involved in 2009 and 2010 and were satisfied with the plans.”
On December 29th,
2010, the South March Highlands filed a motion for leave to appeal this Divisional
Court decision. Ultimately, on May 6th,
2011, the application for leave to appeal was dismissed by the Ontario Court of
Appeal.
The City spent $435K
on external legal fees to successfully defend this complex environmental legal
challenge in the Divisional Court and its subsequent appeal. However, as a result of the City’s current Costs Policy, it did not seek costs
from the incorporated community groups in this matter. In the standard course,
had the City sought its costs as the successful party, it may have requested
between $240,000 and $350,000.
In the case of the application by the South March Highlands Inc. for leave to appeal the earlier dismissal of its application to overturn City Council’s decision to proceed with development in the area, the Appeal Court expressly awarded nominal costs to the City, despite the City’s clear statement that it was not seeking costs. The Court of Appeal’s insistence on awarding costs suggests that the decision was prompted by consideration of factors beyond compensating the City. Rather, the award may represent an implicit statement from the Court that a party contemplating the commencement or continuation of a proceeding must be prepared to face a cost award for invoking the court process, irrespective of the wishes of the opposing party.
(c)
Interval House
As was reported to
Council on January 31st, 2011, the City was successful in defending
an appeal under the Building Code Act
by a group of residents with respect to Interval House, a residence for battered
women fleeing domestic violence. In
short, the case sought to determine whether or not the City’s Chief Building
Official had acted lawfully in deciding that the above-noted residence was in fact a “group home” under the Zoning By-law. In dismissing the appeal, Regional Senior
Justice C. Hackland concluded that the Chief Building Official had reached a “reasonable conclusion that the
characteristics of the proposed land use and operation” of the facility in
question was “properly dealt with as a group
home rather than a shelter, so as to be permitted in a residential zone…”. As was also noted
in the decision, Mr. Justice Hackland stated that, “in the event that the respondents (the City) wish to seek costs and are
unable to agree with the applicants on this issue, a concise written submission
is to be directed to this court within two weeks of the release of these
reasons and the applicants may respond within two weeks of receipt of the
respondents’ submissions.”
The City’s legal expenses
associated with its external counsel’s successful defence of this litigation
were $57,445.85. On February 9th,
2011, Council was advised that, the City Clerk and Solicitor’s review concluded
that, based on the City’s Policy on
Seeking Legal Costs, there was no basis on which to seek to recover those
legal costs from the applicants. In the
absence of this Costs Policy, it is
possible that the City may have sought between $32,000 and $46,000 as the
successful Party.
(d)
Lansdowne Park
Revitalization
Finally, the recent
litigation surrounding the Lansdowne Park revitalization plan must also be
reviewed in light of the City’s Policy on
Seeking Legal Costs.
In the matter involving the
Friends of Lansdowne Inc., the applicants asked the court to overturn City
Council’s decisions of June 2010, to proceed with an agreement with the Ottawa
Sports and Entertainment Group (“OSEG”) for the renewal of Lansdowne Park.
The City’s Policy on Seeking Legal Costs
contemplated only that an assessment of the merits of a case can be made once a
final decision was reached (i.e. once the City had been successful and may be
able to determine whether the case was frivolous or vexatious). However, the Friends of Lansdowne Inc.
demanded early on in the litigation that the City expressly commit to not
seeking costs against them in any event. In keeping with the Policy, this demand was refused. In January 2011, the Friends of Lansdowne
Inc. brought a motion asking that the Court order the City not to seek costs
irrespective of the outcome. Although
the Court was not prepared to do so before the case was heard, the motion was
clearly intended to provide comfort to the applicants that they could continue
the litigation without fear of the possibility that their motivation might be
questioned in any final decision and costs would be awarded against them. That
being said, the likelihood that a court will publicly call into question the
motivation of a party in any final decision is unlikely.
On February 7th,
2011, Master MacLeod confirmed the City’s actions with respect to motion on
costs in the following manner:
With
respect to the motion concerning costs, Ottawa has agreed that the personal
applicants may discontinue the proceeding in their own names and permit it to
continue only in the name of the corporate applicant, Friends of Lansdowne Inc.
The City also agrees that Friends of Lansdowne Inc. has standing to bring the
application and furthermore it has affirmed that the policy on public interest
litigants will apply. That policy is
that Ottawa will not seek costs against a public interest litigant unless it
acts frivolously and vexatiously and a committee of council authorizes the
request for costs.
To
date, the City has spent approximately $1.25M on the litigation involving the
Friends of Lansdowne Inc. In addition, it is estimated that appeal costs could
range from between $100K to $200K.