Davies v. Clarington (2009), 254 O.A.C. 356 (CA)
MLB headnote and full text
Temp. Cite: [2009] O.A.C. TBEd. OC.042
Bonnie Davies (plaintiff) v. The Corporation of the Municipality of Clarington, VIA Rail Canada Inc., Canadian National Railway Company, Timothy Garnham, The BLM Group Inc., Apache Specialized Equipment Inc., Apache Transportation Services Inc. (defendants/appellants) and Blue Circle Canada Inc. (defendant/respondent) and Hydro One Networks Inc. (defendant/appellant)
(C49139; 2009 ONCA 722)
Indexed As: Davies v. Clarington (Municipality) et al.
Ontario Court of Appeal
Goudge, Sharpe and Epstein, JJ.A.
October 16, 2009.
Summary:
An action was commenced in 2000 arising out of a train derailment. On April 10, 2002, one of the defendants (Blue Circle Canada Inc.) delivered an offer to settle consenting to a dismissal of the claim and all counterclaims and cross-claims, without costs. That offer remained open for acceptance for 30 days. On February 1, 2005, Blue Circle delivered a second offer on the same terms. That offer was never revoked. Prior to closing arguments at trial, the defendants, except Blue Circle, settled with the plaintiff. In the course of the settlement discussions, Blue Circle offered to accept $250,000 from the settling defendants in relation to costs it incurred in defending their cross-claims. It subsequently reduced that amount to $200,000. That offer was not accepted and Blue Circle did not participate in the settlement.
The Ontario Superior Court, in a decision reported at [2006] O.T.C. 320, dismissed the action against Blue Circle.
The Ontario Superior Court, in a decision reported at [2007] O.T.C. Uned. N99, awarded Blue Circle costs against the settling defendants totalling $509,452.18 plus disbursements of $26,276.77. The award included full indemnity costs for the period following the delivery of the February 2005 offer to settle. The settling defendants appealed from the costs award.
The Ontario Court of Appeal allowed the appeal. The court set aside the costs award in relation to fees only and in its place substituted the amount of $300,000.
Practice – Topic 7407
Costs – Solicitor and client costs – General principles – Power to award solicitor and client costs – [See both
Practice – Topic 7803
].
Practice – Topic 7803
Costs – Solicitor and his own client costs – Entitlement to – General – An action was commenced in 2000 arising out of a train derailment – On April 10, 2002, one of the defendants (Blue Circle) delivered an offer to settle consenting to a dismissal of the claim, counterclaims and cross-claims, without costs – That offer remained open for acceptance for 30 days – On February 1, 2005, Blue Circle delivered a second offer on the same terms, which was never revoked – Prior to closing arguments at trial, the defendants, except Blue Circle, settled with the plaintiff – In the course of the settlement discussions, Blue Circle offered to accept $250,000 from the settling defendants in relation to costs it incurred in defending their cross-claims – It subsequently reduced that amount to $200,000 – That offer was not accepted and Blue Circle did not participate in the settlement – The action against Blue Circle was dismissed – The trial judge awarded Blue Circle costs against the settling defendants totalling $509,452.18 plus disbursements of $26,276.77 – The award included full indemnity costs for the period following the delivery of the February 2005 offer to settle (although referred to by the trial judge as substantial indemnity costs) – The settling defendants appealed – The Ontario Court of Appeal allowed the appeal – Elevated costs (which the court used to refer to both full and substantial indemnity costs) were warranted in only two circumstances – The first involved the operation of an offer to settle under rule 49.10 – The second was where the losing party had engaged in behaviour worthy of sanction – The parties agreed that rule 49 was not applicable to Blue Circle’s February 2005 offer – There was also no finding by the trial judge that the settling defendants had conducted themselves in a reprehensible or egregious fashion – The costs award was also otherwise not fair and reasonable – The settling defendants would not have expected that they would be faced with an award of that magnitude – There was no basis to justify anything other than a partial indemnity costs award in favour of Blue Circle – The court set aside the costs award in relation to fees only and substituted the amount of $300,000.
Practice – Topic 7803
Costs – Solicitor and his own client costs – Entitlement to – General – The Ontario Court of Appeal stated that while fixing costs was a discretionary exercise, attracting a high level of deference, it had to be on a principled basis – The judicial discretion under rules 49.13 and 57.01 was not so broad as to permit a fundamental change to the law that governed the award of an elevated level of costs (full or substantial indemnity costs) – 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 was being made – See paragraph 40.
Cases Noticed:
S & A Strasser Ltd. v. Richmond Hill (Town) et al. (1991), 45 O.A.C. 394; 1 O.R.(3d) 243 (C.A.), consd. [para. 19].
Apotex Inc. v. Egis Pharmaceuticals (1990), 2 O.R.(3d) 126 (Gen. Div.), refd to. [para. 19].
Boucher et al. v. Public Accountants Council (Ont.) et al. (2004), 188 O.A.C. 201; 71 O.R.(3d) 291 (C.A.), consd. [para. 20].
Moon v. Sher et al. (2004), 192 O.A.C. 222; 246 D.L.R.(4th) 440 (C.A.), refd to. [para. 20].
Hamilton v. Open Window Bakery Ltd. et al., [2004] 1 S.C.R. 303; 316 N.R. 265; 184 O.A.C. 209; 2004 SCC 9, refd to. [para. 27].
Young v. Young et al., [1993] 4 S.C.R. 3; 160 N.R. 1; 34 B.C.A.C. 161; 56 W.A.C. 161, refd to. [para. 29].
Mortimer et al. v. Cameron et al. (1994), 68 O.A.C. 332; 17 O.R.(3d) 1 (C.A.), refd to. [para. 30].
McBride Metal Fabricating Corp. v. H & W Sales Co. (2002), 158 O.A.C. 214; 59 O.R.(3d) 97 (C.A.), refd to. [para. 31].
Walker v. Ritchie et al. (2005), 197 O.A.C. 81 (C.A.), revd. [2006] 2 S.C.R. 428; 353 N.R. 265 (S.C.C.), refd to. [para. 31].
Scapillati v. Potvin (A.) Construction Ltd. (1999), 122 O.A.C. 327; 44 O.R.(3d) 737 (C.A.), consd. [para. 37].
St. Louis-Lalonde et al. v. Carleton Condominium Corp. No. 12 et al., [2005] O.T.C. 559; 142 A.C.W.S.(3d) 934 (Sup. Ct.), affd. (2007), 155 A.C.W.S.(3d) 479; 2007 ONCA 108, refd to. [para. 39].
Dyer v. Mekinda Snyder Partnership Inc. et al. (1998), 61 O.T.C. 390; 40 O.R.(3d) 180 (Gen. Div.), refd to. [para. 39].
Foulis v. Robinson (1978), 21 O.R.(2d) 769 (C.A.), refd to. [para. 44].
Apotex Inc. v. Egis Pharmaceuticals (1991), 4 O.R.(3d) 321 (Gen. Div.), refd to. [para. 45].
131843 Canada Inc. v. Double “R” (Toronto) Ltd. (1992), 7 C.P.C.(3d) 15 (Ont. Gen. Div.), refd to. [para. 47].
Réno-Dépôt Inc. v. Wonderland Commercial Centre Inc., [2008] O.A.C. Uned. 545; 2008 ONCA 786, refd to. [para. 47].
Beresford-Last v. Dworak et al., [2000] O.T.C. Uned. B92; 101 A.C.W.S.(3d) 696 (Sup. Ct.), refd to. [para. 48].
Marcella v. Integrated Management and Investments Inc. et al., [2007] O.T.C. Uned. 651; 157 A.C.W.S.(3d) 51 (Sup. Ct.), refd to. [para. 48].
Andersen et al. v. St. Jude Medical Inc. et al. (2006), 208 O.A.C. 10; 264 D.L.R.(4th) 557 (Div. Ct.), refd to. [para. 51].
Statutes Noticed:
Courts of Justice Act, R.S.O. 1990, c. C-43, sect. 131 [para. 12].
Rules of Civil Procedure (Ont.), rule 49.02, rule 49.10 [para. 16]; rule 57.01 [para. 13]; rule 57.01(4)(c), rule 57.01(4)(d) [para. 14].
Authors and Works Noticed:
Orkin, Mark M., The Law of Costs (2nd Ed.) (1993 Looseleaf Ed.), para. 219.05 [para. 15].
Counsel:
James M. Regan, for the appellants;
Brian J.E. Brock, Q.C., and Roseanna R. Ansell-Vaughan, for the respondent.
This appeal was heard on June 18, 2009, before Goudge, Sharpe and Epstein, JJ.A., of the Ontario Court of Appeal. The following judgment of the Court of Appeal was delivered by Epstein, J.A., and was released on October 16, 2009.
